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14 Feb 2022

What Decentraland’s DAO Means For Investors

Devansh Sinhal

Decentralized Autonomous Organizations (DAOs) have existed ever since cryptocurrencies became popular. They allow users and investors to engage in a permissionless world in a capacity that’s hard to replicate anywhere else.

In this article, we will explore what DAOs are, how Decentraland works through a DAO, and why you, as investors, should be interested.

Key Takeaways

  • DAO is a decentralized organization that is completely automated.
  • DAOs function using the same stakeholders as cryptocurrenciescomputers and nodes.
  • The Decentraland DAO owns the most important assets in the Decentraland world.
  • To participate in the voting of a DAO, users need to hold assets or tokens valuable to that particular DAO in their name.

Introduction to DAO

Decentralization is the primary feature of most cryptocurrencies and their applications. It removes government or corporate control and makes these assets permissionless, ensuring that they are not controlled or manipulated by a single authority or individual. These currencies are, in turn, controlled by a large variety of computers, networks, and other nodes working together.

The success of cryptocurrencies and the decentralization narrative motivated a group of developers to come up with the concept of a DAO in 2016.

DAO, as the name suggests, is a decentralized organization that is completely automated, just like cryptocurrencies. DAOs also lack any traditional hierarchical structures such as management or a board of directors; they function using the same stakeholders as cryptocurrenciescomputers and nodes.

These automated organizations were created with the goal of eliminating errors made by individuals, leveraging the wisdom of automation and the crowd. Putting decision-making powers into the hands of a large group of people instead of an individual, a DAO makes the decision-making process robust.

How does a DAO work?

When a DAO is created, it is given a set of rules. These rules are often created by a group of developers with the use of smart contracts. These smart contracts lay out the groundwork for the functioning of this decentralized organization. They are highly efficient, verifiable, and publicly auditable, allowing every member to completely understand how they work.

Once the rules are in place, the DAO needs to figure out how to get funding. This is typically done by issuing tokens and bestowing governance. The DAO raises funds by selling the native tokens of the organization to investors and giving them proportional voting rights in return. Once the fundraising achieves a certain threshold, the platform becomes ready for deployment.

The highlight of a DAO is that once the funding stage has been completed, the rules of the DAO can no longer be changed by the consensus of the creators. The entire power lies in the hands of the token holders and their will prevails in a permissionless manner.

Decentraland MANA’s DAO

Decentraland is one of the biggest metaverse projects out there. It allows users to engage with other users in a world that’s completely digital. Users can build homes, casinos, or art galleries, on LAND parcels, which are pieces of real estate bought and sold freely on its marketplace.

However, Decentraland is not just a virtual world project; it is a highly-functional DAO. The Decentraland DAO owns the most important assets in the Decentraland world. These are the LAND Contract, the Estate’s Contract, the Wearables for your avatar, or the Marketplace. The DAO also owns a huge amount of Decentraland’s native token, MANA, which allows it to be completely autonomous.

Decentraland’s DAO works in a fashion similar to other DAOs. The token-holding community of the platform has the power to propose and vote on policy updates, LAND auctions, and other Non-Fungible Tokens (NFTs) that get traded on the Decentraland Marketplace. The community also gets a powerful say in what NFTs are allowed in the world and which are not. All of this voting takes place on the governance interface of the DAO.

The community can and does use its power to govern to upgrade LAND and Estate NFTs to include more features, decide dates of LAND auctions, add new Wearables for avatars, and vote on the addition and replacement of community servers.

What does this mean for investors?

A major part of the allure of Decentraland is the fact that it is decentralized. The metaverse subscribes to the vision of handing over control of the platform to the userspeople who have skin in the game. Through this DAO, users are given that very right.

As a user, you too can determine how the Decentraland world behaves: what kind of wearables are allowed in the marketplace, what kind of content is allowed (or disallowed), when LAND auctions take place, and so on.

How to participate

What Decentraland’s DAO Means For Investors

To participate in the voting of a DAO, users need to hold assets or tokens valuable to that particular DAO in their name. In Decentraland’s case, these tokens are MANA, and LAND packets. Voting power on governance decisions is decided by the total balance of MANA and LAND associated with your wallet.

Here’s how it works:

1 MANA = 1 Voting Power

1 LAND = 2,000 Voting Power

Every estate is made up of the individual packets of LAND consisting of that estate. For instance, if an estate comprises two parcels of LAND, its ownership will contribute 4,000 Voting Power to the owner.

Wrap-Up

All operations on Decentraland require you to have a certain number of MANA coins to operate efficiently. For example, the sale of LAND tokens, wearables, and estates, all happen through MANA. Therefore, if you want to get in on Decentraland’s DAO and become a community member, don’t forget to buy MANA from a trusted source like CoinSwitch.

Click here to buy MANA directly.

Click here to convert INR to MANA.

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.

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Devansh Sinhal

Content Writer

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