There are some common automation challenges for forming a DAO. These include:
communication
joining the DAO
proposals for rule changes in the DAO
voting infrastructure
treasury management
Fortunately, tools have emerged to automate and decentralize these issues. Let’s walk through how we might set the tooling up in a simple example involving a DAO created to fund a social cause.
Let’s say we want to form a crowdfund DAO, where members all pool their money together for a common cause — like a GoFundMe. Together, we can vote on how the money gets used. We program the rules so that once a simple majority vote is met, the funds automatically get transferred to the agreed upon projects.
Membership:
We can manage admissions by only allowing people who contribute to the fund to join. The way DAO’s do this is by issuing tokens to represent the dollar contribution.
Think of the tokens kind of like tickets representing your share of the fund. You can submit some crypto to the DAO’s smart contract. The contract puts it in the communal treasury, and issues you a token, where $1 USD = 1 token. If you own a crowdfund token, you’re a member of the DAO.
You can implement this in one of two ways:
Mint the tokens via tooling with tools like TryRoll.
Manually by writing a smart contract yourself that manages this token exchange.
Essentially you would send some Ethereum to the smart contract’s address and call one of its public API’s, which would move the money into its treasury and issue tokens to your address.
Communication:
Most DAO’s communicate through a combination of Telegram/Discord/Twitter. This part is not hard; create accounts on all 3 platforms, and put all community announcements there.
Let’s say also that we only want token-holders to join these channels. We can use tools like Collab.land to token-gate these channels.
If we own the tokens, a bot automatically lets us in. The bot can also check every few hours to see if we still hold these tokens. If we don’t then it can revoke access to former members.
Treasury Management:
We also need a way to manage the funds. One way is to use Gnosis Safe to split control of the treasury over many different people. That way if you have 10 people, you could require 6 people together to agree to ever do anything with the funds.
If you have a full-time team managing this fund, you can support employee payroll from the treasury using Superfluid. You can also get dashboarding and insights into the state of the treasury via Llama.
Voting:
Now we have to decide what to use the money in the treasury for. We can submit a proposal for what to use the project for and allow a way to vote. This vote counting can be done via the tokens, where each token translates to a single vote. Decentralized tools for both proposals and voting exist — Snapshot and Automata being the most popular ones.
Compare this to the way this might be done without the blockchain. If a single entity controlled the treasury, then that person alone could steal all the money for themselves. If a single person controlled the votes, they can manipulate vote counts. A single person who controls all communication could censor people. DAO’s eliminate these risks by decentralizing and automating all parts of the organization.
And one final note: crowdfund DAO’s are actually a thing, and follow this general structure for setup. Constitution DAO most recently tried to pool funds together to win a bid for a copy of the Constitution that went on sale at Sotheby’s. It gave out $people tokens, managed communication via Twitter and Discord, and used Gnosis to control the treasury funds. They ultimately lost the bid, but were a proof of concept of how a DAO could pool funds together quickly for a common cause.