Here are 3 DAOs You Should Follow In the Second Half of 2022

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Bitcoin burst onto the scene back in 2009 as the first application of blockchain, a decentralized ledger technology with no single point of failure. Satoshi Nakamoto invented blockchain to underpin the world’s original cryptocurrency, but sharp minds quickly realized its potential for multiple applications besides payments. 

Over the last decade the number of use cases for blockchain has exploded, but few have generated quite as much excitement as decentralized autonomous organizations, or DAOs. 

DAOs are organizations that rely on computer-embedded code as an alternative to the traditional organizational and management structures that govern entities. This enables them to be led by their communities with a democratic consensus on all decisions reached, as opposed to having a centralized leadership made up of a few individuals. 

The beauty of DAOs is that they go in the direction of the people who have a stake in it. Community members of DAOs need to acquire tokens that underpin the project, with each token representing the holder’s voting rights. 

When a DAO token holder submits a proposal, the community votes on the issue to decide how it will proceed. Those decisions are then encoded as smart contracts, ensuring transparency and an equal voice for all members. 

DAOs promise to be revolutionary because they provide a solution to what’s known as the “principal-agent dilemma”, which refers to a conflict in priorities between an individual or a group (the principal) and those who’re making the decisions on their behalf (the agent). 

A good example of this is the relationship between a company’s stakeholders and its chief executive officer. The CEO (agent) might act in a way that’s not in line with the priorities of the stakeholders (principal) but rather, in their own interest. For instance, a CEO might pay himself an excessive bonus, creating risk for the company’s shareholders. 

DAOs use community-led governance to solve this dilemma. It gives power back to the stakeholders, and there’s no need to rely on a CEO that might not have their best interests at heart. Stakeholders can rest assured that their interests are likely to be aligned, as the DAO provides an incentive not to be malicious. All stakeholders stand to benefit from the DAOs’ success, meaning they’ll take decisions to ensure it succeeds. 

This advantage means DAOs are some of the most enticing investment prospects in the crypto industry. With that in mind, these are our top DAOs to watch for the remainder of this year. 

TronDAO

TRON needs no introduction. Having launched back in 2017 it has since emerged as one of the most successful blockchain projects around. Its native $TRON token is a top 25 cryptocurrency according to Coinmarketcap, and it’s also home to dozens of popular DeFi apps, which had accumulated more than USD 1.3 billion in total value locked at the end of February. 

While TRON is not new, it is the first major blockchain to launch an official DAO. TRON DAO was established in January to replace the TRON Foundation that previously called the shots. With the launch of TRON DAO, the decision making has finally been handed over to the community. What with TRON being such a widely known and established project, that makes its DAO one of the most powerful in the entire crypto community. 

TRON DAO will enable $TRON token holders to participate in community governance and ensure their voice is heard when it comes to all major decisions. So all future decisions it takes will be based on the community’s consensus. 

TRON said TRON DAO will also help to boost community engagement while making its decision-making processes more transparent and secure. In any case, TRON DAO is one of the biggest DAOs ever created, with more than 70 million unique TRON accounts and 4,765 TRON nodes spread across the globe. The TRON blockchain is home to hundreds of decentralized projects that will all want to ensure their voices are heard, including prominent stablecoins, wallets, exchanges, DeFi apps, games and so on. 

With TRON DAO now calling the shots, TRON hopes its community will give it the advantage it needs to achieve its long-term goal of decentralizing the internet. 

“The vitality and prospect of a blockchain protocol largely depend on whether it has strong community engagement,” TRON explained in a post on Medium.  “This is exactly what makes TRON the first public chain to grow into a DAO, and it also equips TRON with a unique edge in the fiercer competition in this sphere.” 

iZUMI DAO

One of the most intriguing new DAOs around is iZUMI Finance, which DeFi users might recognize as a programmable liquidity mining protocol for Uniswap 3. 

iZUMI Finance recently announced it’s shifting to a DAO governance structure that will rely on  innovative “veNFTs”, which enable a “quadratic voting” process that’s more representative of the community’s consensus than traditional voting mechanisms. 

iZUMI’s veNFTs are at the cutting edge of NFT technology, designed to reflect all aspects of governance, such as voting, boosting and staking rewards. In typical DAOs, governance votes are weighted by the number of tokens held in a wallet – so the more tokens an individual has, the greater the weight their vote carries. But that can lead to centralization in cases where a few individuals (whales) accumulate large numbers of tokens. Quadratic voting is designed to overcome this. 

With quadratic voting, the results of any community ballot reflect the majority consensus, as opposed to the voting power of a few heavyweight token holders. The way it works is fairly complicated, with algorithms used to ensure that an individual’s subsequent votes do not have the same weight as their original vote. As such, someone who has accumulated thousands of tokens in a DAO will not be able to make multiple votes to overcome the general consensus of the community. 

Not only is it far more democratic, but iZUMI Finance’s quadratic voting structure also enables its community members to communicate how strongly they feel about the issue. This will help to ensure minority voices can be heard and eliminate polarization in the community. iZUMI Finance is therefore one of the most transparent DAOs around and definitely one to keep an eye out for. 

Balthazar 

The Balthazar DAO is aiming to become the biggest and most successful “guild” in the play-to-earn crypto gaming space and it’s taking a more cautious approach to do that. 

Crypto gaming is an emerging industry of video games built on the blockchain that allow players to compete for NFTs and cryptocurrency rewards, or in other words, get paid for winning games and completing challenges. It’s easy to see the incentive – and therefore the potential – of such games, but playing requires a substantial investment, as it’s necessary to purchase an NFT to gain access. 

Those NFTs can be expensive, hence the rise of so-called P2E gaming guilds, which are DAOs that accumulate dozens of tokens and loan them to promising players, known as “scholars” in return for a share of the rewards they earn. 

Whereas other guilds tend to buy their NFTs outright, Balthazar sees this as a risky business model. In a recent interview with Stockhead, Balthazar CEO John Stefanidis explained that it’s impossible to predict which P2E games will endure. If a game goes out of fashion, NFTs associated with that will lose a lot of value. 

Balthazar avoids this risk by instead loaning NFTs from other players, then renting them out to scholars, taking only a very small cut of their earnings. 

“We want to stay as asset-light as possible,” Stefanidis explained. “We’re agnostic on the games but long on the actual industry.” 

While Stefanidis is currently the chief decision maker at Balthazar, it will soon shift to a democratic, DAO-based governance system so that the community decides on important issues, such as which NFTs to rent and which scholars to take on. 

Balthazar is building up a lively community too. As of January, it had more than 70,000 members on Discord and 1,500 scholars actively playing games, with another 30,000 players on its wait list.

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