DAO Crypto Tokens: What, Why And How To Buy
- DAOs are built on public blockchains and are open source and transparent.
- By giving every community member a say in how they function, DAOs democratize organizational decision-making in a way that publicly traded companies can’t.
- In this article, we’ll guide you through on how you can purchase DAO tokens on Binance with fiat so you can kick-start building your crypto portfolio.
Mirroring the explosive interest in DeFi in 2020, DAOs have gained a spike in popularity with no signs of slowing down. Find out all about DAO crypto tokens and how you can get your own DAO crypto tokens with Binance.
A big part of DeFi governance, Decentralized Autonomous Organizations, or DAOs, are internet-native organizations collectively owned and organized by their members. DAOs give users a chance to start social organizations without knowing each other, establish their own rules and make their own decisions autonomously on the blockchain. As explained more in-depth in the article later, there are many uses of DAOs, including investments with attractive returns. You can start adding your own DAO tokens with Binance today.
Binance is home to the world’s largest global cryptocurrency exchange by trading volume and user base, and offers a wide selection of DAO coins for users to add to their portfolio. Sign up for a Binance account to begin your DAO token journey today.
What Is DAO?
According to its technical definition, Decentralized Autonomous Organizations, or DAOs, are social organizations represented by rules encoded as a transparent computer program, controlled by the organization members, and not influenced by a central government. Or to put it simply, think of DAOs as an internet community of like-minded individuals with a shared bank account. They can come together to form a group, establish a mission and decide how to fund their DAO’s mission collectively.
How Do DAOs Work?
1. Rules are created via smart contracts through community voting
DAOs operate using smart contracts, and are decentralized and community-led with no central authority. These smart contracts lay the foundational rules of how a DAO is to operate. And these rules cannot be changed unless they’re voted upon by the DAO’s core community members. As decisions to the DAO’s operational workflows, governance system, and incentive structures will need to be voted on in order to take effect, smart contracts are essential to creating a sustainable and autonomous DAO.
2. Users can fund DAO’s growth by purchasing the DAO’s native tokens
Once the rules of the smart contract are written onto the blockchain, the next step is to acquire funding. Since smart contracts require the creation and distribution of internal property like native tokens, which can be used for voting or incentivizing certain activities on the protocol. Individuals or entities interested in participating in the DAO’s growth can purchase the DAO’s native token which are cryptocurrencies tied to certain projects. Token holders are given voting rights proportional to their holdings and are able to own equity in the DAO to help shape the DAO’s future.
3. Receive governance tokens to influence token distribution and treasury management
Once there’s enough funding for a DAO to kick-off, all of its decisions will be made by token holders through a consensus vote. As the DAO’s stakeholders, community members will then work towards the most beneficial outcome for the entire network. Beyond voting rights, members can also work for their DAOs where they can get governance tokens in return, including roles in token distribution and treasury management.
DAO’s Benefits In The Real World
Currently, DAO crypto tokens are being used for many purposes like investment, charity, buying and creating NFTs, fundraising and many more. For example, the Decentraland DAO includes a decentralized city planning committee in the metaverse where they decide moderation of content, LAND policy and auctions, among others.
Below we’ve outlined the top three benefits of DAOs and their native tokens in the real world:
Decentralized, Automated And Transparent
The decentralized and transparent nature of DAO gives its members full ownership to maintain the protocol. Moreover, DAOs are automated – thanks to smart contracts – and decisions are executed automatically. Compared to traditional companies, DAOs eliminate all third-party transaction costs and the organization only “pays” for existing on the blockchain, thereby increasing their profit margins.
Decision-making power in the organization is given to each token holder. This power is proportional to the tokens held by a member, but it doesn't give them more rights or privileges. Token holders have the right to effect changes that further develop the protocol, which makes it a rewarding and truly democratized space.
Potential Investment Returns
Owning a governance token in a DAO is a bit like holding equity in an early stage start-up — if it becomes successful later on, that equity will be extremely valuable. The DAO members who are also token holders are rewarded with a fixed percentage of the transaction volumes on the exchange. This helps create a more stable token user base with a long-term investment mentality. All in all, this reward mechanism is what differentiates these tokens from those launched by other non-DAO projects.
What Are The Most Popular DAO Tokens?
Uniswap (UNI), at a price of $16.11 and $10,105.62 million market cap
Aave (AAVE), at a price of 215.2 and $2,900.85 million market cap
Curve DAO (CRV), at a price of $4.73 and $2,123.86 million market cap
Maker (MKR), at a price of $2,058 and $2,059.26 million market cap
Dash (DASH), at a price of $140.8 and $1,482.91 million market cap
Compound (COMP), at a price of $192.4 and $1,217.08 million market cap
Sushi Swap (SUSHI), at a price of $7.15 and $909.79 million market cap
Decred (DCR), at a price of $57.6 and $787.31 million market cap
Synthetix (SNX), at a price of $5.10 and $585.69 million market cap
0x (ZRX), at a price of $0.723 and $612.99 million market cap
* These prices are a reflection of 12 January 2022’s prices.
* This list is ranked according to market cap and does not constitute a recommendation or endorsement by Binance to buy or sell any currency.
Where And How Can I Buy DAO Tokens?
If you’re looking to purchase DAO tokens, you can get started in minutes on Binance, the largest cryptocurrency exchange in the world. There are different options available for buying cryptocurrencies at Binance. You can consider making a fiat deposit or using a debit/credit card.
Step 1: Make a fiat deposit via an e-wallet transfer or bank transfer on Binance. Be sure to check the available fiat channels for desired currencies. See in-depth guide on “How to Deposit USD via SWIFT”
DAOs help create a new world of corporate governance by assisting many blockchain projects achieve the ideal decentralization. By carrying out corporate operations autonomously through smart contracts, DAOs have many benefits for its stakeholders — by providing full ownership on decision making that can be rewarded accordingly on the growth of the DAO. As DAO’s legal challenges are clarified and managed, more and more organizations will look to adopt DAO platforms for their businesses, to automate certain aspects of their core business activities.
With the popularity, utility and promising future of DAOs skyrocketing, it’s important that users always DYOR before making a purchase or investing in the DAO token they trust in.
Ready To Kickstart Your Cryptocurrency Journey With Binance?
Get started by signing up for a Binance.com account or download the Binance crypto trading app. Next, verify your account. Once you’ve verified your account, there are three main ways to buy cryptocurrencies on Binance using cash: you can buy crypto with cash from Binance via bank transfer, card channels or e-wallets options.
Linking your debit card, credit card, or bank account (available in many regions) is one of the easiest ways to buy Bitcoin and more than 100+ cryptocurrencies.
Disclaimer: Cryptocurrency investment is subject to high market risk. Binance is not responsible for any of your trading losses. The opinions and statements made above should not be considered financial advice.
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