In today’s article, we’ll talk about the biggest DAO projects by market cap and what makes them so valuable.
First of all, what is a DAO? Basically, a DAO is an organization that offers the possibility for a group of people to act upon the same goal but without a boss or a board of directors in charge.
Members make proposals and voting is required to implement any changes. This way, we don’t have to deal with the “We’ll just do as the boss says” type of mentality. Still, just like in a conventional organization, there are also clear rules. They are written in smart contracts and can be seen by anybody.
Slide 2 – UniSwap
The first DAO we’ll talk about is, of course, UniSwap. In only four years, it managed to become one of the most powerful and popular decentralized exchanges in the world of crypto.
It was created to allow transactions between users risk-free and, most importantly, without a central authority asking for verification, regardless of the transacted amount.
Since it was built on the Ethereum blockchain, Uniswap uses Smart Contracts. This way, the limit order book found on centralized exchanges such as Binance is replaced by liquidity pools.
These pools include certain coins such as Ether and Wrapped Bitcoin that must be in exact proportions of 50/50. Anybody who decides to be a provider and put their tokens to work will receive a percentage from fees. Imagine that putting your tokens in a pool is similar to a bank deposit for which you receive interest.
UniSwap is the perfect place to showcase your project to the world. Any ERC-20 token can be listed easily since you don’t have to go through a complicated process imposed by a centralized exchange and no listing fee is required.
Slide 3 – ApeCoin
The second DAO we’re looking at is ApeCoin. To better understand it, we must first look at the Bored Ape NFT collection. Everything began when its creators, Yuga Labs, confirmed the airdrop for the APE token for all users who had at least a Bored Ape NFT.
For every NFT owned, they received 10,094 APE tokens that, currently, have a cumulative worth of $190,000.
But what is the goal of this DAO? Why would you wish to own this token?
Well, this is the way you can actively partake in making decisions within the project, you can buy MetaRPG land, and, soon enough, we hope this will become the token of a play-to-earn game developed in collaboration with nWay – although, that hasn’t been confirmed yet.
Slide 4 – AAVE
Our next DAO, AAVE, can be seen as a decentralized bank since it is based strictly on loans, deposits, and exchanging tokens but You can also choose to stake them.
Compared to a traditional bank, AAVE doesn’t require a KYC process as in the personal data of the user.
Just like UniSwap, here you can also find liquidity pools, but those who add their tokens to pools also earn and that is thanks to flash loans.
These allow investors to borrow using interest rates of just 0.09% without any safety warranties being required. But, if not paid in time, all transactions will be reversed.
Basically, these flash loans are used by those who wish to make a profit from yield farming. Another feature that can be found only on AAVE is the possibility of changing the interest rate from a fixed one to a variable one. This lets you take advantage of important market shifts.
Slide 5 – Maker DAO
Ever since the creation of the DeFi space, one project always had an important role – Maker DAO. Currently, it stands out for having the highest value locked in by investors – more than $14 billion.
These locked tokens are used to generate the DAI stablecoins. Compared to a traditional bank where you have to meet several requirements in order to get a loan, here, that trust comes from the stored token.
In the case of Ether, which was the first one on Maker DAO, if its value is over 150% compared to the borrowed stablecoins, then the loan is not exposed to any risk. But, if it drops below that, losing the initially deposited Ether is imminent.
The feature that is specific to Maker is that it is using those loans in order to maintain the price of DAI as close as possible to $1 without needing any institution to be in charge of the process. This made it the first decentralized stablecoin.
Slide 6 – Dash
The last DAO will talk about is Dash. It is one of the oldest projects as it was inaugurated in 2014.
It works using the same consensus mechanism as Bitcoin aka Proof of Work and there is a limited number of cryptocurrencies that can be created – 18.9 million.
But there are some advantages over Bitcoin. The first one is that the block is formed in 2.5 minutes compared to 10 for Bitcoin. The second one is InstantSend, a characteristic through which transactions go over the mining process, Proof of Work, and reach master nodes that process them quickly.
A master node also has the duty of storing data from the Dash blockchain and deciding how the funds will be used for developing the project in the future. To become a master node you must own 1,000 DASH – although that means an investment of about $100,000.
Aside from InstantSend, DASH also offers PrivateSend, a way by which multiple transactions are combined and sent to different addresses so that the wallet that sent or received the token won’t be identified.