to create
a DAO?
What’s the main idea behind a DAO?

Fundamentally speaking, it’s the management of an organization that is governed by smart contracts. To create a decentralized organization, it’s needed to define its architecture, the ways of participation, the main business processes and conditions for implementing management functions. Once the architecture is formed, it must be encapsulated in a software package (smart contract) and placed on a blockchain network.

Accordingly, a programmer can create a DAO in practice, with a manager involved: one is responsible for the business processes, the other is in charge of their implementation in the form of a smart contract and the launch.

In theory, programmers can create a DAO by themselves, but their skills may not be enough to launch, scale it and attract participants. That’s why there are services like XDAO that exist that can get DAO projects the attention they require.

How to Create a Decentralized Autonomous Organization with XDAO?

XDAO is a service for creating decentralized autonomous organizations. The main  functionality of the platform aims to allow any user to create a DAO in just a minute.

— The process is easiest to consider on the example of creating an investment DAO because it is the most common type of organization, — says Vladislav Shavlidze, XDAO CEO and Founder. The first step is getting to know each other. A user or a group of users learns how the platform’s interface works. Then comes the creation. Creating a DAO is as simple as possible and consists of performing a specific sequence of actions, which is clearly defined. The third stage is collecting money. Smart contracts contain conditions for generating liquidity provider tokens (LP tokens). They determine the ownership of the company’s shares in proportion to the investment in DAO’s “share capital.” These tokens guarantee that the investment can be recovered at any time. Also, governance tokens, which provide the right to vote, are generated when a DAO is created. The rules for their distribution and the voting conditions are also set out in the smart contract in the process of the organization’s creation. The next stage is the use of money. It is the process of increasing the capital, which usually involves investment activities. And the final stage is the distribution of profits. Investors “burn” LP tokens and get their assets back with a profit.

“We were dreaming about establishing our own CryptoMetaDAO for half a year. But it looked very  complicated and expensive to do. And finally everything changed, because we found the XDAO protocol. Now we are able to launch presales in our own launchpad module — everything is clear for the whole team. Thanks to XDAO, we have become a professional decentralized venture fund.”

Igor, YouTube Blogger
Igor, YouTube Blogger

The entire communication within the DAO community takes place in messengers, usually Telegram or Discord. It’s impossible to close a DAO — the work cycle either repeats or does not.

A smart contract can be abandoned, but it will remain in the blockchain for the lifetime of the blockchain network.

XDAO provides technical support for its platform and can help with PR for large,  interesting projects. We refine new modules based on user requests and additional functionality in the form of smart contracts. We are also engaged in forming a community around the service — representatives of the community can help with advice or support an interesting initiative.

Our team members are also available for consulting on the creation and development of a DAO. We give technical guarantees. First of all, smart contracts are secure, so there are no technical risks. Secondly, if our site or service goes down, the launched projects will continue to function. We have instructions on how to deploy the functionality to manage a smart contract on the localhost, and the control of it will not be lost, — explains Egor Gavrilov, CTO of XDAO.

"XDAO is a real Unicorn for supporting DAOs!

XDAO provides comfortable and highly technological DeFi tools for DAO. They’ve made everything go very smoothly and easily! A convenient interface and contracts fully satisfy our needs to create a DAO for Punch Capital."

Sergey Panchenko, CEO Punch Capital

Sergey Panchenko, CEO Punch Capital
DAO is a vast concept. In order to start understanding decentralized autonomous organizations, there are some terms you need to grasp first. We joined up with the XDAO team to prepare a small glossary that will help beginners understand how DAOs work.
Decentralized Autonomous Organization (DAO) — a form of organization where participants' activities are based on rules set in smart contracts, and any decisions are executed only when consensus has been reached.
Governance Token (GT) — a governance or native token that allows its members to create and participate in votes. GT has no economic value, cannot be sent to another wallet like a regular token, and can only be created or sent as a result of voting in a DAO.
Assets Under Management (AUM) — all funds managed by a DAO.
Liquidity Provider Token (LP) — an investment token or liquidity provider token. An ERC-20 standard token, backed by DAO assets and varying in price depending on the total issue of the LP and AUM of a DAO. When an LP token is burned, a holder receives a proportional share of the AUM of a DAO. The total supply of an LP token depends on its economic value.

For example, if 10 LPs were issued and the project's AUM is $1,000, then the value of 1 LP is $100.
Consensus — a principle according to which any transaction, change of the DAO management rules or other actions allowed by the conditions of a particular DAO, is carried out only after creating a vote and reaching a quorum.
Quorum — the number of votes required for a decision to be executed.
On-chain voting — every participant's vote is "recorded" on a blockchain, and the result of the vote is executed automatically after a quorum is reached. This type of voting is characterized by high gas costs.
Off-chain voting — all participants' actions, including the voting result, do not interact with the blockchain. This type of voting is usually used for project community voting, as it does not entail the binding execution of a decision.
Hybrid voting — participants vote off-chain using a unique signature, while the execution of the voting results is done on-chain. This type of voting allows you to significantly reduce gas costs without compromising security.
Absolute majority voting — 50+1% of the votes must be reached to achieve a quorum.
Module — a special smart contract providing some additional function for a DAO.