Dr Ravi Chamria (CoFounder & CEO, Zeeve) conducted an insightful webinar on the topic "The Anatomy of a DAO -Understanding the inner workings of Decentralised Organisations." He starts by giving the overview of what's going to be in today's webinar. Some of them includes: What is DAO & How you can create a DAO, Different kinds of DAOs, Challenges that needs to be resolved for more wider adoption of DAOs.

1. The Anatomy of a DAO
By Ravi Chamria
CEO & Co-Founder, Zeeve
Understandingthe Inner Workings of Decentralized Organizations

2. • Coined in the 1990s by the German computer scientist Werner Dilger,
the term “DAO” was taken up two decades later by blockchain
enthusiasts and developers, most notably…
• Ethereum’s Vitalik Buterin, who began theorizing in 2014 about DAOs
as entities featuring “automation at the centre, humans at the
edges”
• In 2021, the total value locked in DAO treasuries increased by a factor of 40,
from $380 million to $16 billion.
But, as we will explore, the story is larger than that…
What's Inside:

3. • The idea of decentralization & emergence of DAOs
• How DAOs work
• Some Interesting DAO Initiatives
• The advantages and disadvantages of DAOs
• Key legal and regulatory issues that DAOs face
What we discussed

4. Introduction to Decentralization
• Decentralizationis commonly referred to as the
shift of power (and decision-making) from a
centralizedentity (person, organization, or
group) to a distributed network.
• Decentralized networks attemptto lower the
trust that users must place in one another and
prevent them from exercising power or control
over one another in ways that undermine
network operation.
• Decentralization impacts severalaspects of
society, from the structure and quality of
governance to national wealth, economic
development, and human well-being.

5. Key Aspects of Decentralization
Truthless Ecosystem
Enhances data
reconciliation
Minimized system
vulnerability
Improved resource
distribution

6. • Trustless ecosystem: No need to know or trust others in the network; each
participant has a copy of the same data.
• Enhanced data reconciliation: Decentralized data storage provides real-time,
shared access to data, reducing the risk of data loss or inaccuracies.
• Minimized system vulnerability: Decentralization can decrease the risk of failures
due to single points of weakness, like resource depletion or corruption.
• Improved resource distribution: Decentralization can optimize resource
allocation for better performance, consistency, and reduced risk of catastrophic
failure.
Key aspects of Decentralization

7. With the growth of the decentralized aspect of the internet,
there has been an increase in discussions about DAOs.
Supporters argue it is the next step toward a decentralized future but
what exactly is a DAOs?

8. Emergence of DAOs:
•In Colonial times, there were “joint stock corporations,” then came our modern-daycorporations,then “limited liability
companies”(LLCs).Now there are DAOs—“decentralized autonomous organizations.
•DAOs are a new kind of entity, regarded not as “companies”but as collections of individuals organized around the
decentralization, autonomous functioning, transparency, and bottom-up principles that characterize the digital universe
•The first functional organization calling itself a DAO,known simply as The DAO, was created in 2016 as a platform for
collective investment in projects on the Ethereum blockchain.
•Afterraising about $150 million in value in less than a month from more than 11,000participants, a vulnerability in the DAO’s
code was exploited,and The DAO was abandoned as part of a “hard fork” in the Ethereum network to restore the funds.
•Significant interest in DAOs began in 2020 again, alongside surging interest in cryptos,NFTs, and DeFi

9. DecentralizedAutonomous Organizations
• Smart contracts: Algorithmsthat execute when
specific criteria are met, governing the
organization's code.
• Flattened hierarchy: No single individual owns or
manages the entire enterprise, unlike traditional
CEO roles.
• Community-driven: Decisions are made
collectivelyby the community, fostering a
decentralizedapproach to governance.
Key Components
A DAO is a group of people who agree to follow a specific set of
rules to achieve a shared goal, withrules encoded through smart
contracts and decision-making drivenby the community.
Smart
Contracts
Flattened
Hierarchy
Community
Driven

10. DAO Use Cases & Types:
● Grant Funding – Grant Funds to projects building on Decentralized Technologies
● Investment – Makes investments into early-stage DApps
● Protocol Governance – Perform functions such as Voting, lending-borrowing, etc.
● Services: Service DAOs act as talent allocators. They create decentralized working groups
for people to work for the open internet and get paid.
● Social Activity: Here people with a common interest join together to socialize and expand
their network
● Collector: Makes investment and collects NFT assets
● Media Activity: Media DAOs also recognize the importance of viewers, listeners, and
readers, allowing them to become part of the decision-making process.
DAO Use Cases

11. DAO Use Cases & Types:
DAO Types:
Grants DAO Investment
DAO
Protocol
DAOs
Service
DAOs
Social
DAOs
Collector
DAOs
- MolochDAO
- GitCoinDAO
Metacartel DAO
Orange DaO
Maker DAO
Aave
Uniswap
ENS
SuperTeamDAO
Yield-Guild-Games
Mirror
Audius
OG ClubDAO
DeveloperDAO
MetricsDAO
FlamengoDAO
Whale DAO
Bored-Ape-Yacht-
Club
Examples:
Media
DAO
BanklessDAO

12. • Metaverse DAO: Offers a novel Farm-as-a-Service model. Earn crypto rewards from various
blockchain networks while holding just one native token.
• Aave is a DeFi system that allows you to borrow or lend cryptocurrency in return for digital
asset collateral.
• Blockster is a cryptocurrency-based media network that focuses on user-generated
content. The platform features its token (BXR), the foundation for all advertising on content
sites.
• Aragon: A platform specializing in open-source tools for developing and implementing
DAOs. Tools for making governance more accessible are included.
• Gitcoin DAO: Provided more than $40 million in funding via hackathons, grants, &
crowdfunding. Rewards grants via quadratic funding. Support by weighing the number of
contributors more than the amount funded.
Some interestingDAO Initiatives:

13. • Create smart contracts: Developers establishthe DAO's
foundation with thoroughly tested smart contracts.
After launching, they can only amend the rules specified
by these contracts through the governance system.
• Acquire funding & implement governance: Decide on
funding methods, such as token sales, and establishthe
governance system.
• Launch on the blockchain: Once set up, the DAO goes live
on the blockchain, and stakeholders make decisions
collectively.
• Operations Starts: Proposals are made and members can
vote on them.
The founders of the organization —individuals who
developed the smart contracts — no longer have any
influence over the project more than the other
stakeholders.
Launching DAO
The Four-step launch of a DAO project

14. Govering a DAO is a complex, dynamic process. To aid this
effort, DAOs use a variety of voting processes, tools and
governance procedures

15. • Token-based quorum voting: Requires a certain number or percentage of tokens to participate for a proposal to
be submitted and passed. Ex: Uniswap, Compound
• Delegation: Allows token holders to outsource decision-making and voting rights to trusted individuals or groups.
• Councils/Committees: Trusted token-holder representatives act as a quasi-board of directors, often elected via a
decentralized process.
• Continuous approval voting: Allows new proposals to be submitted as long as they surpass the voting weight of
the last successful proposal.
• Optimistic governance: Assumes proposals pass unless there is a strong objection, reducing the number of
proposals token holders need to vote on.
• Quadratic voting: Counts votes based on their square root, reducing the influence of large token holders and
promoting fairness. Ex: GitCoin DAO
• NFT-based voting: Moves towards a one-person, one-vote model by using non-fungible tokens to represent
voting rights, mitigating the risk of plutocracy. Optimism is experimenting with this.
Voting Processes

16. • DAOs have built-intreasuries that store the funds of
the organization.
• DAO members cangain access to the treasury only
after receiving the approval of other members.
• Multisig wallets are often used for DAO treasury
management.
• A Multisig wallet (alsoa multi-signature wallet) is a
wallet that requires a predeterminednumber of
signatures to validate transactions
• A well-known solution for a multi-signaturewallet is
Gnosis Safe.
• Apart from a multi-sig wallet, there are also a range
of tools required, to manage all DAO activities
effectively.
Managing DAO: The treasury
Unlocking a crypto multisignaturewallet

17. Managing DAOs:

18. ● Multilayer coordination and enforcement layers of
management processes
● One legal entity Employment contracts salaries
acts as incentive
● Top-Down Management
Traditional Organizations
● Smart contracts are used instead of legal
employment instead of legal employment
contracts and governance is done via machine
consensus rather than governance rukes
● No central legal entity
● Smart contracts
Vs Decentralized Autonomous organisations

19. Key Issues for the Future of a DAO
Lower Voter
Engagement
Technical
Risks
Pseudonymity &
Accountibility issues
Power
Concentration
Decision-makingis hindered by low
voter turnout (e.g., Uniswap)
Vulnerabilitiescan lead to catastrophic
losses (e.g., BadgerDAO hack)
Information asymmetriesand
potential misuse
Centralization of power undermines
decentralization goals
Practical Challenges

20. Legal Challenges:
Legal Structure Properties
Corporations - Separationof ownershipandoperation
- Centralizedgovernance andequityshareholderrequirements
LLCs (LimitedLiabilityCompanies) - Flexibilityinstructure
- Beneficial-ownershipdisclosure challenges
Partnerships - Inflexible andinconsistentwithDAOoperations
- Unlimitedliabilityandlackof flexibility
Foundations - Private orpubliccharitiesforpublicinterest
- Varyingrequirementsandregulations
Associations - Broad classificationforcommonobjectives
- Dependence onjurisdictionandregulations
Trusts - Actingonbehalf of beneficiaries
- Recognitionandtax dynamicsvarybycountry
Do DAOs fit withinexisting corporate structures, or are new legal recognitions necessary?

21. Key Issues for the Future of a DAO
Legal Status Taxes and registration
Talent management Securities regulation
Do DAOs fit within existing corporate
structures, or are newlegal
recognitionsnecessary?
How should DAOs handle taxation and
registration requirements?
Addressing the challenges of retaining,
recruiting, and compensating
members.
The classificationof DAO tokens and
compliancewith relevant regulations
Legal and Regulatory Challenges

22. Wrapping Up:
• Over the last few years, the biggest decentralized autonomous organizations
have come to control enormous amounts of value: a total of more than $9
billion sits in DeFi DAO treasuries.
• But It remains to be seen where DAOs will ultimately have the greatest impact.
• DAOs have potential in decentralized applications, coordinating human
networks, and addressing ESG challenges.
• DAOs may be seen as new corporate forms, specialized implementations of
traditional ones, or challenges to the notion of corporations.
• The long-term importance of DAOs depends on their effectiveness in solving
organizational and governance problems.

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