For many people, DAO is a new term of which they are not aware yet, and that is why it’s very important to be updated about it.
DAO is a decentralized autonomous Organization, and if you want to know about the benefits of DAO, you can go through our last conversation with the media person of Starapple by clicking here.
Today, it’s time to go through the prerequisites for building a DAO, and also for that we had words with the media person of Starapplemna that is leading the market in the DAO segment, and gather the information mentioned below.
What are the prerequisites for building a DAO?
Well, there are many prerequisites to build a DAO, and it’s very crucial to align all the things properly to that is giving assurance of success in DAO.
Here I will let you know the five most important prerequisites that you need to fulfill while building a DAO.
DAO is not like a local or small business, there must be a clear purpose and intent to take it long, and the stronger objective will take your project longer. Every DAO is built with a specific purpose and objective that helps to define the conditions of smart contracts as well.
A Voting Mechanism
Decision-making in a DAO is enacted through voting; thus, a voting mechanism is an initial necessity for the establishment of a DAO. A DAO can change its voting mechanism, but some kind of voting technique is an initial necessity to establish a DAO.
Governance Tokens or a Shared System
Users can deposit cryptocurrencies to use the shared system for voting. They are unable to vote without tokens and cannot take part in any discussion of proposals until they are granted governance tokens.
A DAO is stronger when more people hold voting power, rather than just a few. So the greater number of participants in a DAO, the more fair the decision will be.
There needs to be a balance in opinion because a DAO’s decision power is most impacting when it is spread across a larger group of distributed stakeholders.
DAOs are responsible for allocating funds from a crowdfunding campaign to their members. Each member of the group has access to what is essentially just a shared account, with no one having the authority to make decisions on behalf of the project. DAOs need a system that can be agreed upon by all parties which will oversee how money is spent.
These five are the major prerequisites that you need to know, well, there are also many other ones that are also truly important.
If you don’t want to miss them out on your knowledge, don’t forget to stay tuned with us on social media.