What are DAOs & How can they benefit your business? l SENS

January 4th, 2023

What are DAOs & How can they benefit your business?


Decentralized Autonomous Organizations (DAOs) are an innovative way to get people who share common interests together. By giving every individual an equal voice in decision, this encourages people to be responsible for achieving their missions as a single entity.


Let’s be with SENS for some key definitions and helpful use cases of DAOs!!!

What is a DAO?

A DAO, or Decentralized Autonomous Organization, is a form of organization run by the community with no central authority. Smart contracts are the key to establishing the underlying rules and carrying out the chosen course of action. At any time, proposals, votes, and even the code itself are openly and publicly reviewed.


It is governed entirely by its community members who collectively make critical decisions about the future of the project. For more detail, each individual member creates proposals about the expected operations of the protocol and then come together to vote on each proposal. When proposals meet some predefined criteria of consensus, the rules instantiated within the smart contract will be implemented.


As a result of greater utilization of a healthy system, the value of the tokens of which each DAO member is in possession of will increase. Then, token holders benefit as the protocol does.

How does a DAO work?

Smart contracts, which set out the basic architecture for the DAO to operate, are established to create the rules for the DAO. Members can easily understand and review how the protocol works as coded agreements are transparent, verifiable, and publicly auditable on the blockchain system.


The next step is about funding. This is often accomplished through the sale of tokens, which the protocol uses to raise money and finance the DAO treasury. Holders of tokens receive certain voting rights in exchange for their currency, often based on their holdings. The DAO is ready for deployment when funding is completed.


No special authority can control the rules of the DAO. Once the token holders' community has decided on the code, it can only be modified by a consensus established through member vote.

5 Outstanding Use Cases of DAO You Need to Know

There are a number of DAO use cases, and different types of them serve different purposes. Here we introduce to you some mainstream use cases, to get to know the benefits of DAOs in the early time when you want to enter Web3 projects.

Protocol DAOs

A protocol DAO is a kind of DAO that governs a decentralized protocol such as decentralized exchanges, a borrow or lending application and other dApps.




  • MakerDAO: This was the first protocol DAO ever created. It is formed onto the Ethereum network with the use of smart contracts and MKR governance to enable users to lend and borrow cryptocurrencies, as well as vote on changes to the Maker Protocol
  • Uniswap: Uniswap launched its governance token, UNI, giving the token holders voting rights in Uniswap's development and operations.

Philanthropy DAOs

A Philanthropy DAO aims to support social responsibility initiatives by organizing around a shared goal to deliver an impact in the world of Web3.




  • Big Green DAO: This first non-profit led philanthropic DAO is considered to be the food justice charity that democratizes and decentralizes grantmaking for food and gardening organizations in the US.
  • UkraineDAO: UkraineDAO raised donations which reached the number of $3 million in ETH to support Ukrainian soldiers in less than a week.

Collector DAOs

Collector DAOs are responsible for gathering funds so that the collective community can purchase and own blue-chip NFTs or other digital collectibles, where each member owns a share based on the percentage of their investment.




  • Flamingo DAO: Flamingo is the NFT-focused DAO which aims to explore community investment opportunities for digital art, collectibles, in-game items and other tangible assets.
  • PleasrDAO: This is a group of DeFi leaders, early NFT collectors and digital artists who acquire culturally significant pieces with a charitable twist.

Social DAOs

Social DAOs create online communities of like-minded individuals such as artists and creators to share insights, host events… As Social DAOs are community focused, owning a required number of tokens, owning an NFT or being invited are some of the ways to enter these communities.




  • Friends With Benefits: Friends With Benefits is a Social DAO focused on building community and fostering creativity. In which, members have full access to connect with creatives, and attend exclusive events with 75 $FWB tokens.
  • Krause House: Krause House is a DAO governed by a community of basketball fans whose ambitious goal is to own an NBA team.

Grant DAOs

A Grand DAO aims at funding and fostering new projects and ventures in the DeFi space.




  • Gitcoin: This is a platform where users can get paid to work on open-source software and submit their own project ideas to the platform in order to crowdsource funding from contributing donors.
  • UniSwap Grants: The Uniswap Grants Program provides grant funding to those developing Uniswap Protocol-based applications, tools, and other projects.


Launch your own DAO today!


Understanding the use cases and types of DAOs is crucial for choosing the right avenue for your business. Furthermore, based on your ideas and business model, DAO can be flexibly applied to help upgrade your business in a decentralized way.

Advantages of a DAO

Despite some variations in construction, all DAOs have the same key advantages. Here are some additional benefits DAOs offer over businesses with traditionally structured businesses.


  • Decentralization: A DAO can decentralize power over a much wider user base than depending just on the acts of one person or a small group of users.
  • Participation: When people have a direct say and voting authority on all issues, they may feel more powerful and connected to the entity. A DAO allows token holders to vote, burn tokens, or utilize their tokens in ways they believe are beneficial for the company.
  • Transparency: Within a DAO, votes and codes are cast via blockchain and publicly viewable. How their vote and their judgments will be made public, this forces people to behave as they believe is best. This encourages behaviors that will enhance the reputations of voters and deters misconduct against the community.
  • Community: The idea of a DAO inspires people to work together invisibly to realize a shared vision. Token holders may communicate with other owners whatever they may dwell to achieving their missions as a single entity.

Disavantages of a DAO

Let’s get to know some of DAOs’ potential disadvantages for better understanding of how it can slow down your business.


  • Speed: Although DAOs use blockchain technology, which is famous for its speed, the community-driven aspects of the organization can impede progress. Impacts to the code can take time because any modification to the DAO needs to be voted on. This is especially true in emergency scenarios like responding to a security incident.
  • Security: In a world where blockchain technology is growing at an alarming rate, security has become more important than ever. Implementing a DAO needs extensive technical know-how; otherwise, decisions or votes may not be validly cast. Trust may be broken and users leave the entity if they can't rely on the structure of the entity.
  • Education: A DAO has the responsibility of educating a lot more people in regards to pending entity activity. While DAOs bring varied groups of individuals together, one recurring problem is that these diverse groups must learn how to develop, strategize, and communicate as a unified unit with an awareness of projects, incentives, or resource accessibility.
  • Regulated: All rules and regulations for a DAO are enforced by smart contracts so this can make it difficult to change existing rules, especially if these rules were not clearly defined early on. Group decision-making may be troublesome for a DAO's general administration and may be problematic if a DAO becomes embroiled in a legal dispute.

How can a DAO benefit your business?

  • Engage with Customers: A decentralized autonomous organization (DAO) for business enables businesses to interact with customers more. It may help businesses enhance consumer engagement and loyalty by giving people a clear and effective opportunity to decide on company problems.
  • Better Fundraising Opportunities: DAO allows businesses to tap into a global pool of potential investors. This means companies can raise more money than they could through other methods. A DAO first raises money by exchanging fiat currency for its native token. The native token's value will rise if a DAO is successful. If the members vote to authorize such actions, the DAO can then issue future tokens with a higher value to raise further funds and make asset investments.
  • Improves Security: DAO provides a decentralized platform for managing digital assets, enabling users to keep their private keys safe from third parties. Users can effectively and securely manage digital assets thanks to it. To give consumers a transparent and safe environment in which to manage their investments, the platform makes use of smart contracts.

If you have a startup business and want to function as a DAO, you will need to follow the proper legal procedures.


You must first specify the rules for selling cryptocurrencies or crypto tokens. The security procedures for dealing with possible hackers must also be described. Secondly, you'll require a practical contract or framework to integrate the DAO system into your own system. But in order to do all of this, you will need to hire a lawyer and obtain the pass needed to enter the system.

The Future of DAOs

More creative and significant DAOs start to appear as the technology develops. DAOs have the potential to fundamentally alter the way we live and interact with one another by enabling the formation of enormous networks of linked individuals and groups.

Accessing the wealth of DAOs is simpler than you might think. With SENS, the leading blockchain development company in Vietnam, you can create your unique ideas about DAOs and let it offer unique opportunities to grow and build your community in a decentralized way!






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