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Relationship Between DAOs and NFTs



The NFT space is an ever-evolving space with different measures employed to improve accessibility and to keep it mainstream. One of the new developments in the NFT space is the adoption of Decentralized Autonomous Organizations (DAOs).

In functionality with NFTs, DAOs help NFT projects to eliminate the bureaucratic process. DAOs also serve as the powerhouse of NFT-based projects in the metaverse.

Examples of these projects are Gamefi and Socialfi projects. Before diving deep into the relationship between DAOs and NFTs, it is important to understand what DAOs are.

What are DAOs?

Decentralized autonomous organizations (DAOs) are autonomous organizations that are controlled and regulated through a set of rules via computer programs or codes.

These computer codes are called smart contracts. As a decentralized organization, DAOs exist and run on a blockchain platform. To know more about DAOs, read this.

DAOs and NFTs

Before the inception of DAOs in the NFT space, the existing traditional organizational governance made users lack sovereignty. This is because the founders of the NFT have sovereignty over all decisions on the project. They control the launch of features, they establish rules and  also unveil upgrades.

The inclusion of DAOs into the roadmap of NFT projects has brought transparency to the NFT space via a distributed decision-making system. Its automated governance of NFT platforms allows users to actively decide the future of the platforms.

This inclusion has further eliminated the barriers to the decision-making process such as who can suggest changes to the platform’s governance or who has the voting power.

Some of the output of the synergy between DAOs and NFTs are highlighted below.

  1. Voting Power

Although there are several similarities between DAO-enabled NFT platforms and traditional NFT platforms. The striking difference is the governance model and the ownership policies. DAOs serve as a kind of board room where crucial decisions about the NFT projects are made. This decision-making takes place in 3 major stages. The proposal, the voting and the result of the votes.

Through DAO-enabled NFT platforms members vote to issue grants and effect changes to the existing rules and policies of the platform. Apart from buying NFTs and using them, users get the opportunity to get more involved in the foundational process of the NFT project through the DAO it has partnered with.

Read also:

What you should know about NFT Financialization

Five Things to Consider Before Buying NFTs

What You Should Know About DAOS


  1. Income Generation

NFTs are not just the digitalization of arts by artists, NFTs are also digital arts created by different applications to facilitate the usage of the app. An example of this is the use of NFTs in play-to-earn apps In addition to this, NFT platforms through DAOs provide its users with an array of innovative features that will help improve the user experience.

For example, ZooDao is a DAO-enabled NFT platform that is designed to generate passive income for users. This DAO model has been used to develop NFT battles and NFT yield farming features.

  1. Marketing Strategy

Some NFT projects use DAOs to create publicity for their project and create a lot of hype around their projects. This is majorly done through popular and notable DAOs. Their partnership with these popular DAOs places their NFT in the spotlight and more audience.

In most cases, the NFT team gives some whitelist spots to the DAO to share among members of the DAO.

Although not all NFT platforms and projects collaborate with DAOs, a good number of them have partnered with DAOs because of the potential benefits that come with it. This includes the provision of the benefits of a centralized government to users. 

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