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So you want to start a DAO? This is how, according to Superdao CEO/Founder Yury Lifshits
Decentralized Autonomous Organizations (DAOs) are promising ways for people to organize and self-govern around shared interests, using democratized governance and built-in treasury functions. People are creating DAOs for many different reasons, such as making investments, creating social communities, or purchasing collectables. The use cases are infinite, but the complexities of automated governance, treasury management, and community development are enormous. It feels like crypto 10 years ago, where there was a lot of promise, but little infrastructure developed. Enter companies like Superdao, which are building infrastructure to allow non-technical people to build DAOs.
I had a chance to ask Superdao Founder and CEO Yury Lifshits a few questions about building DAOs, and I sat in on one of his weekly DAO creation workshops. Here are his top points on how to start a successful DAO, how to manage DAOs on a daily basis, and why the model is so popular right now.
The following has been edited for clarity and length.
What is Superdao?
I would describe Superdao as Shopify for DAOs. We want to make it super easy to start, manage, and grow a DAO. We help with smart contracts, NFTs, and DAO management. On Superdao, you can create a DAO in one click, generate and upgrade smart contracts, use a built-in member directory, treasury dashboard, contributor management, newsfeed, and do even more with third-party apps.
What are the biggest mistakes people make when thinking about creating a DAO?
Fundraising before community building. You need to build a solid base of people who all want the same thing and trust the core team to deliver on promises.
What are the biggest factors holding back the mainstream adoption of DAOs?
Wallet adoption. Most people and organizations still haven't figured out how to start a wallet, use MetaMask, etc.
What’s so great about DAOs? Why are they so popular?
DAOs are awesome for growth. Over the last 10 to 20 years, the primary growth model for the majority of startups was advertising. You build something cool, then you buy a bunch of ads from Google and Facebook — that’s how you grow and where you spend most of your investor money. The dominant growth model in crypto is to find a lot of influencers, early adopters, or strategic partners. If you give them tokens, then they have an incentive to make your project succeed, because if you succeed they succeed as well. They become ambassadors and influencers.
DAOs are awesome for employment. In a traditional startup, employing 1,000 people in 100 countries is nearly impossible. The amount of regulation, red tape, and precautions that exist in current labor law is just insane. But getting 1,000 contributors in a DAO that will be compensated in crypto is more straightforward. There is an employee side tax, so as a contributor, you’re liable for your personal income, but as long as there are no employer side regulatory requirements, it becomes very easy to employ and attract 1000 contributors very quickly.
One final reason is just hype. People are not excited about starting a regular company anymore, because that feels hard. Most startups fail. But DAOs feel like a fresh new take on how you do a company, organization, non-profit, or political movement. We discover new forms of human coordination. It might work out, it might not, but it’s intellectually interesting.
How do you start a successful DAO?
This is a general playbook. You need to modify and adapt it to each individual case, but this is how most successful DAOs do it these days.
Start with an idea and a group of people, and do a “brain dump.” Offload any ideas you have in your head into a document. It’s not important to do it right, but you want to put it in writing so that others can read and edit it later, because DAO culture is very asynchronous. You also need a name for your organization. A lot of people don’t think too much about it and make it the area of work, plus DAO. “Hotel DAO,” “Coworking DAO,” etc. You don’t need it to be super complicated.
Set up your primary NFT collection. That NFT collection will have multiple tiers. You actually don’t need to have artwork — it’s no longer a requirement. You could just have a black square, and you can use the same art for all the members. You could also have one artwork per tier. You don’t need anything complex because you can change it later — modern smart contracts for NFTs allow you to update the artwork even after you sell it or give it to someone.
Give free NFTs to people who you like: your core team, the people who are doing the most work on it, and the people who will add the most credibility. Some people call that last group “founding influencers.” We highly recommend you distribute at least 100 free NFTs, though you don’t need to distribute them all at once.
Set up a public NFT sale. It might be a different tier from the same collection — we highly recommend you use the same primary collection as before. Typically people do at least two or three tiers. I’d say $50 to $500 for the bottom layer, $200 to a couple thousand for the middle layer, and $2,000 to $10,000 for the top layer.
When you sell NFTs, you give promises of three types of value: governance value, social value, and product-based value. Governance allows a person to help you make decisions along the way. If you’re making an album, they can help you choose the songs or cover art. Social value gives them access to other members of the community and to shared content, Google Docs, and resources. Product based value gives you access to a product. If it’s a resort, it could give you three free nights there; if it’s a book, you might send them the book. What you don’t promise is a financial upside. You’re not promising a percentage of future revenue.
Typically when you do the NFT sale, you can raise anywhere from a few hundred thousand to a few single millions of dollars.
Now you can build whatever you promised to build and launch the actual token. At that time, you do a token generating event or unlock it for trading. You make it a form of payment for your services, so your book can be purchased with tokens only.
The final step is token listing. You list your tradable token on an exchange, on centralized or decentralized exchanges. All in all, the whole process can take anywhere from three months to three years.
What is the day-to-day life of a DAO like?
There are four elements for managing DAOS
Governance: how you make decisions.
Asset management: As a DAO, you can own things together. This is primarily done through multi-signature wallets, which can contain NFTs and tokens.
Access: providing access to private events, content, and member directories.
Contributor management: finding members, coordinating them, encouraging them, etc.
DAOs are still in its earliest stage of development - Superdao and other DAO infrastructure companies are aiming to make the creation and management of them easier. Superdao publishes a DAO playbook if you’re interested in learning more. Let me know your thoughts on the future of DAOs in the comments below.
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Hi, I’m Andrew Chang - I created the Web3 Roundup to share what I’m learning in this space. I’ve spent my career at the forefront of the technology industry in areas such as crypto/blockchain (Former COO @ Paxos, co-founding partner of Liberty City Ventures), video and adtech. I learn by meeting with founders, investors and other thought leaders and approach Web3 with the same enthusiasm – and skepticism – I had about crypto/blockchain technologies 10 years ago.