The Evolution of Web3 Communities: From Tokenization to Decentralized Autonomous Organizations

The rise of Web3 not only signifies technological advancement but also represents a significant transformation in the ways humans collaborate, innovate, and create value. In the Web3 ecosystem, communities have transcended mere interest groups and become important platforms for value exchange and innovation-driven initiatives. Decentralization, as the core concept of Web3, is profoundly reshaping our understanding of organizations and collaboration.

In this context, the Web3 tokenization community is facing an important choice: whether to transform into a Decentralized Autonomous Organization ( DAO ), in order to harness community strength through this new organizational form, achieving more transparent and efficient decision-making and value creation. This is not just a technological transformation; it also represents a significant shift in culture and mindset, emphasizing collaboration, transparency, and co-creating value.

The Diversity of Tokenization Communities

The tokenized community uses community tokens as the primary means to gain access to the community, participate in activities, and coordinate, transforming members into active participants and stakeholders. Community tokens merge elements of fan culture ( a sense of belonging and connection ), sponsorship ( membership and support ), as well as investment ( transferable ownership and economic benefits ). Depending on the goals and scope of the community, not all of these elements need to play a role.

The value of community tokens is closely related to the direct community value ( member access, rights, and privileges; social capital and status ) as well as long-term community influence ( driven by community profits and the supply and demand of tokens. This is a new form of ownership economy that allows member stakeholders to share in the growth potential of the community and participate in shaping that potential. By using community tokens as rights, members can directly benefit from the development of the community, thus incentivizing them to contribute actively. These tokens may ultimately be used as governance tools for decision-making, becoming an important means of controlling the direction, resources, and outcomes of the community.

The Difference Between Tokenization Communities and DAOs

However, not every tokenized community is a fully-fledged Decentralized Autonomous Organization ) DAO (. While there may be some degree of collective governance and decision-making, token holders do not need to vote on every decision made by the community. The inherent community value and specific status conferred by community tokens distinguish them from pure governance and ownership tokens.

The core of a DAO lies in utilizing blockchain, tokens, and smart contracts to achieve decentralized and automated community governance, decision-making, and value distribution. DAOs uphold the core principle of decentralization, pursuing innovation in autonomy, democracy, and collective decision-making. They coordinate through a set of shared rules executed on the blockchain, which are embedded in the code of smart contracts and controlled by token ownership to allocate decision-making power and financial capital.

In a DAO, the distribution of ownership and decision-making power among token holders is more equal and fair, with no participant holding a disproportionate share. Community activities are often coordinated by transparent mechanisms in smart contracts, which are essentially programs running on public blockchains that automatically trigger actions when specific conditions are met, without human intervention.

In addition, the DAO has an independent treasury. In short, the DAO is an internet community with a shared fund account that establishes its own operational rules, including how to allocate community resources and distribute financial rewards. Overall, compared to ordinary tokenization communities, DAOs are more decentralized, autonomous, and financialized.

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Building and Optimizing DAO

) Basic Principles

For a community to become a true DAO, the key lies in whether it is genuinely owned and managed by its members. This ownership is realized through tokenization, representing a true cooperative membership system. In this system, members or token holders actively participate in decision-making and profit sharing by submitting proposals, voting on decisions, jointly managing funds, and sharing profits, thereby maximizing the long-term collective value.

Tokens can be encoded to automatically receive dividends when there is a revenue flow. This gives cooperative members or token holders the ability to capture the value they create. From the perspective of decentralization, democratization, and economic participation, DAOs are the purest form of community in Web3, embodying the core principles of a new ownership economy.

Build DAO

The purity of a DAO requires extra effort to build and nurture. Like any influential community, a DAO needs to clearly and transparently articulate its community's 6Ps: Goal ### Purpose (, People ), Principles (, Processes ), Platform (, and Proceeds ).

In this process, it is crucial to break down the DAO's goals into a grand vision, community roles and scope, as well as the specific benefits for each contributor. Since the DAO will be operated by its members, it is particularly important to recruit members who are fully aligned and committed to it. This is especially true when documenting operational principles and governance processes, as most of these principles and processes will be encoded into automated programs through smart contracts.

Building the operational structure of a Decentralized Autonomous Organization (DAO) can be very complex and challenging. Before reaching a state of self-regulation and coordination, a DAO is likely to go through multiple adjustments and repositionings. Like startups pursuing a minimum viable product, a DAO can also use a basic, continuously evolving canvas to define and optimize all key processes.

( Optimize DAO

Decentralization is a gradual process, meaning that the scope of leadership shifts from a closely united core purpose and principles to community empowerment and delegation. Many Web3 projects and communities follow a path of progressive decentralization, initially adopting more centralized control with a small focused team to achieve community market matching, before fully transitioning to a DAO structure. During this transformation process, it is essential to balance the returns of the core incubation team with broader community participation and ownership incentives.

Regardless of the ultimate purpose and scope of the Decentralized Autonomous Organization (DAO), its success depends on a sincere recognition of collective wisdom and the ability to leverage this collective energy to achieve the right outcomes. The underlying value model needs to be community-expansive rather than extractive, meaning it is entirely community-driven and serves the community. True grassroots empowerment and ownership begin with identifying and embracing members who genuinely identify with and are committed to the community.

DAOs require high levels of member participation and a vibrant community atmosphere to ensure that good ideas are developed and refined. This necessitates ongoing information dissemination and community engagement to ensure that everyone fully aligns with the core mission and roadmap of the DAO, and provides conditions to promote inclusive sharing and constructive discussions among community members. An effective Token incentive mechanism is crucial to ensure DAO members adhere to a more contribution-based "play-to-earn model" rather than a traditional restrictive "pay-to-play" membership model.

In a DAO, voting power depends on voting rights and their weights, typically based on the quantity and type of tokens owned. Ideally, members earn tokens that represent ownership by contributing to the DAO, which in turn grants them governance rights to participate in proposal voting and other privileges. The submission, review, and voting processes for proposals need to be optimized for inclusivity, scalability, and quality.

Although there is no universally applicable model, the best combination suitable for specific DAO goals and scopes can be found by adjusting multiple parameters. Preliminary screening can be conducted before formal voting for initial review of proposals. In actual voting, the minimum participation threshold and the minimum threshold required to obtain a majority vote can be set. However, the most critical adjustments will focus on how token ownership maps to voting rights, from simple 1 token 1 vote, to 1 person 1 vote, and then to more complex ) voting mechanisms such as quadratic voting (. Other options include weighting based on the reputation of token holders or community roles, or allowing proxy voting.

In conclusion, DAOs require significant adjustments and tools to achieve true decentralized ownership and autonomous self-regulation. Not all tokenized communities need to fully transition to DAOs to create a stronger sense of member engagement and initiative. Many communities may adopt a hybrid approach, increasing decentralized governance and financial power for only certain activities, thereby delegating some control and ownership to members while continuing to build and activate the community. Alternatively, the most active and contributing executors can be developed into co-owners and core members to achieve sustainable community development.

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