Concept Of DAO and NFTs

Understanding The Concept Of DAO & Its Role In The NFT Industry

Last updated on May 20th, 2023 at 07:57 pm


The blockchain industry and technology have advanced a lot in the past few years, and during these years, there has been a wave of revolution. Ranging from creative to financial industries, blockchain technology has come a long way.

In addition to the mainstream and evident adoption of NFTs, GameFi, and DeFi, some other technologies have become popular in a digital ecosystem, known as DAOs.

At this point, many people don’t understand the concept of DAO, and even more, there is not enough awareness regarding how DAO impacts NFTs. So, let’s check out the details in this article!


What Is DAO?

DAO stands for decentralized autonomous organization, and it is a community-based group that’s governed by the utilization of NFTs and tokens that provide voting rights to the members.

The DAOs work through smart contracts that promise automated execution of commands once the regulations and conditions are met. Also, it’s self-explanatory that the DAOs are autonomous and decentralized.

The regulations and conditions of DAO are kept in an open-source blockchain, which means anyone is allowed to check out the codes as well as transaction records.

There is no central entity for directing the DAO decisions but there is a project community for sharing the proposals and they can also vote. The DAO works usually like a corporation but there is no hierarchy-based structure.

Also Read:  Best XRP Cryptocurrencies To Know

This is because it tends to provide a democratic and new process through governance. Contrary to conventional organizations, the DAO members aren’t in a formal contract but they are connected together with incentives and common goals that are based on the rules. In fact, there are various forms of DAOs.

The Connection Between NFTs & DAOs

For the longest time, the DAOs have been associated with NFTs but beginners have difficulty understanding the connection. To be precise, they are connected in the form of collector DAOs. For those who don’t know, the collector DAO is an organization that connects together to create funds that help acquire and issue the NFTs.

This is because in some cases, investing in the NFT project through Bitcoin trading software or other platforms requires a higher capital, which can be challenging for small traders to pay.

However, with a collector DAO, various people can create a fragment of the NFT and APE DAO is the ultimate example. This is because APE DAO is a DAO that segments the Bored Ape NFTs, which allows various people to purchase a fraction of an Ape NFT.

However, you need to remember that the connection between NFTs and DAOs is not limited to the collector DAOs. This is because the DAOs tend to help create NFT projects through community governance.

The community creators as well as members join together to make decisions and brainstorm ideas to create a direction for the NFT project.

The DAOs tend to have the potential for helping the creators and small-scale projects to create communication. However, one needs to understand that not every NFT creator will have a community of their own.

Also Read:  What is Shibarium, and what does it mean for Shiba Inu?

Still, the collector DAOs have the capacity of raising funds and creating well-engaged communities for various NFT projects by letting people vote on the project.

Should Businesses Focus On DAOs & NFTs?

The DAOs and NFTs are likely to change the business dynamics. When it comes down to conventional businesses, are set up with CEOs and founders who have the ultimate say in the business decisions.

Ranging from the missions to goals and decisions, everything is done through the governing bodies. This means that the people on top have the most say.

On the other hand, with DAO, there is no hierarchy and everyone will work as an organizational member while everyone has equal voting power and say in the structure.

The Bottom Line

It is needless to say that the DAOs have been evident for a few years now and are loaded with some amazing use cases.

When it comes down to the NFT industry, DAO is a beneficial and essential tool for supporting the NFT projects’ growth. With the growth of the NFT space, it’s needless to say that more DAO-infused projects will come out.


  • InfomediaNG

    The Infomediang Team comprises a group of researchers, data analysts, and financial experts who closely follow government policies and spending. Our passion lies in empowering people to make informed decisions about their investments by simplifying data for easy understanding. Find us @infomedia_ng on X.

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Scroll to Top