Relationship between DAOs and NFTs
Just as NFTs have been a game changer for creators, artists and athletes, our legal system will need to evolve to account for the creation of the DAOs that govern NFTs and other crypto assets. The vast majority of Blockchain networks and smart contract-based apps are organized as DAOs. Blockchain networks can use a variety of validation mechanisms. Smart contract apps have governance protocols built into the code. These governance protocols are hard-wired into the smart contracts like the rails for payments to occur, fully automated, and at scale. So, what do DAOs have to do with NFTs? From collective ownership of NFTs to governance and more, Decentralized Autonomous Organizations brings a lot to the NFT world.
- Collective ownership
One way Decentralized Autonomous Organizations help the NFT industry is in collective ownership of an asset. Usually, investing in NFTs, especially blue-chip projects, requires significant capital. Of course, not everyone can afford this. Thus, some DAOs were established to allow a group of people to collectively own a high-value NFT without shelling out thousands of dollars.
2. Community governance
Another key area where Decentralized Autonomous Organizations help NFTs is community governance. DAOs are a great means for fans and creators of an NFT project to come together and decide its future. Several NFT projects have already established their own Decentralized Autonomous Organizations. 3. NFT creator collectives This is where NFT creator collectives coordinated by Decentralized Autonomous Organizations come into the picture. Essentially, these are a collective of NFT creators that helps to raise funds, marketing, community building, and more. Typically, artists have to sell their NFT to the DAO in exchange for the DAO’s tokens. The NFTs, in a way, work as collateral for the issued tokens and give the token value.
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