How To Start a DAO in 2025

A decentralized autonomous organization (DAO) is a community without a central authority based on blockchain. All the members of the organization are its owners and act for the sake of its common goal.

As of now, the total treasury of DAOs makes up $12.5 billion, so we can clearly see it’s not just a concert anymore. Robust smart contracts are essential in ensuring security and efficiency in governance within a DAO.

So, how to create a DAO? Why do it? How is it going to improve your business and make it more appealing? A DAO’s token is crucial for enabling governance mechanisms, including proposal creation and voting, thus allowing community members to participate actively in decision-making through their ownership of governance tokens. We at ProCoders have combined technical and analytical knowledge with our experience for this brief yet information-packed guide!

Key takeaways:

• DAO types include protocol, collector, venture, and others. They are used for collecting money for good causes, on valuable purchases, etc.
• The benefits of creating a DAO include transparency, decentralization, and global access.
• There are also challenges, including master nodes that create centralization, difficulty in decision-making due to a large number of participants, and shadow voting.
• To make a successful DAO, you need to consider the purpose and features, the type of organization, create a community, and hire a proper technical partner.

Introduction to DAOs

Definition and Purpose

A Decentralized Autonomous Organization (DAO) is a community-led entity that operates on a blockchain network, allowing members to make decisions and take actions without the need for a centralized authority. The purpose of a DAO is to provide a transparent, secure, and decentralized governance structure, enabling members to work together towards a common goal. In the context of decentralized autonomous organizations, DAO members have the power to shape the direction of the organization through voting, ensuring that decision-making is distributed and community-driven. This decentralized approach eliminates the need for a centralized authority, fostering a more democratic and inclusive environment where every member’s voice can be heard.

Types of DAOs

Before asking how to build a DAO community, you have to determine what type your business needs. By design, they are pretty much the same, but their built-in features decide their final purpose.

Investment DAOs focus on capital pooling to democratize investments in various DeFi operations.

Protocol DAOs

These are the simplest ones in functionality. They are used as governing mechanisms in apps for lending money and other dApps (decentralized applications). The role of a protocol DAO is to ensure the app works as a decentralized, transparent entity.

When you want to create a DeFi app, using a DAO to govern it is a good idea.

Philanthropy DAOs

You can launch a charity DAO to raise funds for a good cause and get the advantages of low-cost, speedy transfers for those in need. For example, it’s possible to collect money by selling non-fungible tokens to support a cause, as UkraineDAO does.

Grant DAOs

The goal of such an entity is to accumulate funds from community members’ contributions. The people involved then vote to decide on the purpose of the money-raising. Usually, the sum is allocated to new-era decentralized finance projects.

Collector DAOs

These are communities for collectors. The members create a common fund to share it and buy more valuable NFTs and other assets in the Web3 realm. As a result, when the organization purchases something, each member becomes a co-owner.

Investment/Venture DAOs

These collect money to invest in startups and innovative protocols in the Web3 space. This is a great opportunity for investors to diversify their portfolios even with a limited budget, which is close to impossible in the traditional world.

Media DAOs

A replacement for ad-based income for content creators, media DAOs use token incentives to compensate people for their ownership.

Social DAOs

Essentially, these are organizations for networking. People with similar interests can join by, for example, purchasing a certain number of tokens, receiving a special invite, or purchasing an NFT.

Benefits of Creating a DAO in 2025

The main benefit of DAOs is, clearly, decentralization, as every member of the agreement has a say in every decision. Transparency is another trust-garnering factor, and global access can help you collaborate with people all around the world.

One more benefit is the prospective future of blockchain technology, which means your investment will be justified, and the project will have a long life if successful.

DAO Governance Challenges You Need to Overcome to Build a Profitable Business

While the idea of decentralized governance is close to ideal, in reality, there may be the following challenges. Potential pitfalls, such as errors in smart contracts and the choice of blockchain platform, can significantly impact the success of DAO projects.

Master nodes

The people who have the most tokens in the DAO become master nodes. They have more voting power in decision-making and overall governance of the community. This makes such organizations somewhat centralized, which contradicts the name of the concept.

Multi-member systems

A community that has thousands of people who have to make mutual decisions often sounds unrealistic. The management of communication, facts presentation, and other processes may become an issue.

Shadow voting

Any organization that gives its token governmental power may experience attacks on its voting system. Anonymous participation in DAOs can enhance trust and equality among participants by valuing contributions over identities, facilitating transparent decision-making processes. Dark DAOs can buy on-chain votes and influence important decisions elsewhere that aren’t what the majority really wants.

Smart Contracts

Role of Contracts

Smart contracts play a crucial role in the functioning of a DAO, as they automate decision-making processes and ensure that rules are enforced without the need for human intervention. A smart contract is a self-executing contract with the terms of the agreement written directly into lines of code, allowing for transparent and tamper-proof execution.

In your own DAO, smart contracts are used to manage voting processes, proposal creation, and token distribution, ensuring that the organization operates in a fair and decentralized manner. The use of smart contracts in DAO governance enables the creation of robust and transparent decision-making processes, which is essential for building trust among DAO members. By leveraging smart contracts, DAOs can maintain a high level of integrity and efficiency, making them a reliable and innovative solution for decentralized governance.

Top-Rated DAO Creation Technologies

To create a DAO, you need the main platform, a smart contract, and a range of DAO tools.

DAO Creation Software

You can use the following platforms to make your first DAO:

• DAOhaus
• Collab.Land
• Aragon

Creating new smart contracts is essential to fix bugs and improve functionality, especially for enhancing a decentralized finance (DeFi) platform like Mantra DAO. You may also need skilled engineers to create smart contracts to back your DAO. It has to be someone with experience in the Solidity programming language.

DAO Tools

To make a DAO functional, you’ll need tools for:

• Treasury management – Gnosis Safe
• Fundraising – Mirror, Juicebox
• Voting – Snapshot

With the right tools comes the right steps for launching your first DAO.

6 Steps on How to Create a DAO

So, how to create a decentralized autonomous organization? Here, we present the essential steps to perform.

Step 1. Consider the structure of your DAO

Before you actually create a DAO, think about its purpose. What kind of community fits best for your business? What’s its goal? How is it going to help you acquire new customers or increase brand awareness?

Think about the decisions you’ll make with the help of the DAO and what benefits the members will get from participating in the project.

Step 2. Choose the right type of DAO

There are multiple types to choose from, with the most frequently used being protocol, grant, venture, and collector DAOs. Based on your needs and requirements, pick a type that will represent them.

Step 3. Gather the community

If you already have a business and want to have a DAO as a reinforcement and innovation, gathering a community shouldn’t be a problem. However, if you start from scratch, some marketing and networking are necessary.

Consider promoting on social media such as Twitter, Reddit, or Discord.

Step 4. Hire developers

To create a crypto token to support your DAO and the organization itself, you need skilled developers. These people will be responsible for creating the contract as the base of the DAO, the token, the frontend of the app, etc.

We recommend using the staff augmentation method. This implies that you get the needed specialists that are already hired with an outstaffing agency. No HR hassles, no additional costs, and office space.

Step 5. Consider the voting mechanism

While discussing the project with your outstaffing partner, consider the type of voting you want to implement. Every member of the community should be able to vote to make changes to the organization.

The most popular type is token-based, where people use their DAO tokens to place a vote. In this system, each token held by a user equates to one vote, emphasizing the significance of owning more tokens to gain greater voting power in decision-making processes.

Step 6. Deploy the DAO and maintain it

Starting your DAO involves the placement of your smart contracts on the Ethereum blockchain, for example. This is the mainnet where the app will operate for real, while during development, engineers use testnets.

Then, the voting system is deployed, and all that’s left to do is maintenance. In case you need to replace the contract, it’s possible, but prepare to do some serious explanation as to why.

The frontend part needs new functions at times and attention to feedback in case something goes wrong.

Community Engagement

Importance of Community

Community engagement is vital to the success of a DAO, as it relies on the active participation of its members to make decisions and drive the organization forward. A strong and engaged community is essential for creating a thriving DAO ecosystem, where members can contribute their ideas, skills, and resources to achieve common goals. In a DAO, community engagement is facilitated through voting processes, proposal creation, and open communication channels, ensuring that all members have a voice and can participate in decision-making.

By fostering a sense of community and encouraging participation, a DAO can create a decentralized structure that is more resilient, adaptable, and effective in achieving its mission. Engaged members are more likely to contribute valuable insights and innovative ideas, helping the DAO to grow and succeed in the dynamic digital world.

DAO and Smart Contract Regulations to Keep in Mind During Development

In the United States, there are no consistent laws and regulations regarding contracts and DAOs. Some legal protection is recommended because otherwise, all members risk unlimited liability, which may cause serious problems should a legal issue occur.

That being said, Tennessee, Vermont, and Wyoming have some working regulations for DAOs, which make legal operations a lot easier.

How Much Does It Cost to Build Essential Components of a DAO?

If you want to create a DAO for free, we can assure you it’s impossible if you want a legal entity. Gas fees are crucial for validating and storing blockchain transactions, and these costs can vary significantly based on network conditions. For example, Ethereum’s transaction fees can fluctuate widely. You’ll have to generate tokens, and Ethereum (if you choose this platform) has an always-changing price. Plus, creating your community as an LLC will cost $100.

Besides, if you choose to turn to specialists, consider that an average blockchain developer’s monthly salary is around $8,580 if we’re talking about the US. One way to save money is to outsource product development successfully to professionals. ProCoders knows the best way to start a DAO and has all the resources to help you! We work with Central European specialists who have lower salary expectations yet top-tier blockchain development skills.

How Can ProCoders Assist You in Creating a Successful DAO?

As a staff augmentation company with over 7 years of experience in IT outstaffing, here’s what ProCoders has to offer for the DAO creation process:

• IT professionals at the medium and senior levels – explore our ProCoders team
• Expert business analysts who can study your company goals and align them with the tech ones
• Dedicated teams of developers, testers, designers, etc.
• Total technical support even post-launch
• Honest communication, process transparency, and much more

All you have to do is schedule a call with our specialists and find out which service you need to launch your DAO sooner and more cost-efficiently and achieve all business goals.

We will discuss all the details, time, budget, functionality, purpose, members, tokens, and everything else, double-check that, and ensure a fruitful collaboration. Upon agreement, we’re going to execute the search for an ideal developer or team to help you start a DAO.

Conclusion

Launching a decentralized autonomous organization allows for transparency, multifunctionality, and trustworthiness. The trust in centralized institutions becomes lower and lower every year due to understandable reasons.

So, a DAO will enable you to collect money for good causes, finance Web3 solutions, and more, given you hire the right people to create the project. By turning to ProCoders, you opt for top experience and honest communication, a guaranteed result, and high security of your data.