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June 21, 2022

What are DAOs in the World of NFT? — What You Need to Know

Whether you’re new to NFTs or you’ve been in the game for a while, chances are you have come across a decentralized autonomous organization (DAO). DAOs appeal to the crypto NFT world because it functions on the same fundamental concept — decentralized governance. How do NFT DAOS work? Do NFT owners need to be a part of one? We’ll address these below.

What are DAOs in NFT and What Does it Stand For?

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DAO, which stands for decentralized autonomous organization, are an effort to operate and govern the crypto NFT space in a way that takes power away from a central authority. The organization is run by individuals on the internet that do not have the final say in the DAO-powered platforms. There is no hierarchy, unlike in traditional companies with a CEO, COO, CFO, etc.

A DAO votes on moves and operates on rules set by smart contracts. The smart contracts are tied to a blockchain, which records all the transactions and rules and regulations, so there is no need for a single authoritarian power, hence a “decentralized organization”. The end goal is decentralized autonomous organizations to work well without an elected leader. 

Decisions are made as a group, and everyone in the decentralised autonomous organisations can be a part of the direction. A great example of a DAO is Bitcoin, which is considered the first, but the concept has been around on the Ethereum blockchain since 2016.  

How Does it Work?

How exactly do NFT DAOs work? We know that it’s a group of individuals, which can be made up of developers, those in the tech field, everyday NFT collectors, and others who have been approved or invited. The DAO operates on a set of rules on smart contracts on blockchain technology. 

Let’s dive a little deeper into smart contracts, which not only help execute DAO regulations but also ones for NFT projects (non-fungible tokens). Smart contracts have fixed and unchangeable programming and automatically execute the rules and regulations. These contracts are public and can be verified, so how a DAO works is transparent. People can see the financial decisions and all the moves made by those in the DAO. 

How Does it Relate to NFTs

How exactly does a DAO impact NFT holders? It impacts many aspects of the NFT world.

• Shared Ownership

The DAO can give collective ownership of a digital asset to the members. Sometimes an NFT that’s worth it costs tens of thousands of dollars. It’s difficult for everyday people to have that amount of capital sitting around, so this is when the DAO comes in. Members pool a predetermined amount of assets together and vote on projects or NFTs to invest in.

Of course, the ownership is shared, and so are the profits. The decisions after purchasing the NFT art, such as when to sell, are also determined by a vote.

• Community Governance

A DAO brings community governance to the table for NFTs as well. It brings creators and supporters of specific projects together to decide their future, such as whether or not to list the collection on sites such as NFT Drops. There are many projects that have created their own DAO, but sometimes it’s created by the community. Those in the NFT DAO can benefit from perks such as access to exclusive parties or launches. 

• For NFT Creators

DAOs bring supportive backing to an NFT project. If you have the full force of a DAO behind your NFT, it means the individuals are also pumping and hyping up your digital assets, and this type of social networking will add value to your project and give you more exposure on NFT platforms. 

A way to do this is to sell your art to the DAO as an exchange for the DAO’s tokens. Your NFT can give the token value as collateral. All token holders in a DAO get to vote and impact the direction of projects the DAO is connected to. 

Different Types of DAO

There are different types of DAOs, and each type has a different purpose and rules stipulated on the smart contract. 

• #1: Social DAO

Social DAOs are what the name suggests, an organization that focuses on the interaction between token holders in the crypto world. Social DAOs are one of the most popular types of decentralized autonomous organizations, and they’re usually made up of individuals with similar interests and views. Social DAOs are not like a traditional company or business; they are places where friendships are formed, and strides are made in the crypto world.

• #2: Investment DAO

Then, we have investment DAOs. Sometimes referred to as venture DAOs, this type of organization is for the purpose of fundraising for decentralized finance (DeFi) activities such as investing.

Unlike social DAOs, investment ones are not usually exclusive. This is the type we described before that invests in projects or NFTs, except instead of using your own capital, you would raise the funds. It doesn’t stop there; the investments can go towards anything. This type of organization is closer to a business or company in which there is a fair voting process.

• #3: Collector DAO

We then have collector DAOs, which are similar to the investment type, except it focuses on obtaining NFTs. Again, you would use cryptocurrency capital and vote on what to invest in (usually blue-chip NFTs). We would suggest users joining collector DAOs to do their due diligence first. Which blockchain does it primarily operate on? Does it operate via a smart contract? What are the values of the DAOs and do they align with yours? These are all questions to ask yourself. 

• #4: Grant DAO

Remember the investment DAO that raises funds for DeFi? Well, the grant DAOs are the ones that fund the DeFi projects. They collect funds from cryptocurrency collectors and vote on what projects to fund based on a vote. 

• #5: Protocol DAO

The name is a little obscure, but protocol DAOs use smart contracts to provide services. This type of organization will require tokens with its holders voting on DeFi development.

• #6: Entertainment DAOs

Another very popular type of decentralized autonomous organization is for entertainment. Entertainment DAOs get people together to create and bring a concept into reality. Basically, entertainment DAOs create projects and mint NFTs.

NFT DAO Projects to Know



Just looking at the world Ape should give you a clue as to which NFT this DAO pertains to. You guessed it: it’s Bored Ape Yacht Club (BAYC)! They launched the DAO with 1,000,000 of their tokens (APED) in 2021. Although it is on Ethereum blockchain technology, and we know that BAYC is pricey, the tokens sold out in just four days.


If you’re looking for blockchain in-game and NFT game assets, then YGG DAO is definitely one you should have heard of. APE focuses on NFTs, but YGG takes a stab at gaming NFTs. The token for this DAO is simply YGG Token, and of course, members can vote on governance and activities like holders of other tokens.

• SharkDAO

For collectors who want to find the rare NFTs, SharkDAO is the one for you. It’s a collector DAO that focuses on NOUNS, a specific NFT project, and members pay for SHARK tokens via cryptocurrency (ETH).

• Jenny Metaverse DAO

The Jenny Metaverse DAO can be found on Unicly. They are also a DAO that collects NFTs and their token is uJenny. Like with those who have tokens on other DAOs, the token is a voting measure.

Future of DAOs

DAOs put a lot or all of the governance control on their members. It operates via smart contracts safely on blockchain technology. As we can see, these organizations have a big role to play in the world of NFTs and exist to help like-minded individuals come together as they would in a business or company but without the single authority that controls companies.

Each member gets a say in how the money is used and what asset to acquire. It’s important to make sure those who are invited and a part of the DAO share an idea or value of what the blockchain decentralized organization is about. Have DAOs peaked in their growth and development?

We can see various types already in operation, and the future is unwritten for DAOS as with blockchain tech, crypto, and NFTs. An example of value this type of organization can bring to the table is becoming a platform to replace traditional methods of governance. Because they are new, there are still some existing security issues and securities laws they must follow in order to be more trusted in the community.

DAOs have evolved since the open-source code and computer programs they were created on, and we’re hopeful for the future.


• How does a DAO make money?

DAOS make money through investment decisions, funding, and projects. It all depends on what type of DAO you’re involved in. There are many, with ones that focus on acquiring rare NFTs to others that use their efforts to fund DeFi activities.

• Is Bitcoin a DAO?

Yes, Bitcoin can be considered a DAO. Although Bitcoin is a cryptocurrency, it operates with the fundamentals of a decentralized autonomous organization where there are agreements enforced via a set of terms and all transactions are tracked.


The idea of a DAO is enticing because it brings people together and creates a sense of connection and community on the internet. The goal is to create governance independent of a single central authority. The code and the members of the DAO are the ones who hold the power and influence the future direction of the projects. 

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