DAOs on Kadena: Building Decentralized Communities with Swarms

Imagine getting together with friends to vote on group decisions like investments, buying art, or purchasing a house, but all of the decisions between the group happen on-chain. Alternatively, imagine bringing more transparency to your business with on-chain decision-making. These are some possibilities for using a Decentralized Autonomous Organization (DAO). The use cases for DAOs are as diverse as companies or group decision-making can be.

As illustrated throughout this article, DAOs have a relatively long history of different blockchains. However, other networks lack several components, chiefly security and flexibility. With Swarms.Finance, powered by Kadena, these barriers are avoided, allowing DAOs to have a range of use cases as wide-reaching as your imagination.

What are DAOs?

Over 10,000 DAOs have been established worldwide since 2016 (Park, Ureta, and Kim, B. 2023). According to Park et al.’s research, the funds deposited into DAOs surpassed $23B at that time.

DAOs are a new breed of internet-native organizations taking the world by storm. Membership and participation in a DAO are often tied to ownership of a specific digital token. This token grants voting rights on proposals that shape the DAO's future – anything from investment decisions to project development. The main benefits of DAOs include enhanced visibility and accountability.

Unlike traditional companies with hierarchical structures or a friend group that makes decisions using texts, Venmo, and traditional banking, DAOs operate on-chain. They are communities brought together by a shared purpose, governed by transparent code, and fueled by collective decision-making.
Additionally, DAOs (via blockchain technology) allow for trustless and tamper-proof voting, making the votes more secure and verifiable based on the rules set in the smart contract.

History of DAOs

Some argue that Bitcoin was the first DAO. In a 2021 Bitcoin Magazine article, the argument was made that Bitcoin possesses two essential characteristics of a DAO—it is decentralized and autonomous. However, DAOs today are understood as organizations deployed as smart contracts layered on a smart contract, not a blockchain network, according to Hassan, S. & De Filippi, P. (2021).

“The DAO” is another example. The DAO was essentially an on-chain venture capital organization that failed in June 2016, when investors lost 11.5 million Ethereum worth roughly $40B today (Santana and Albareda, 2022).

The DAO hack inspired many security and technology advancements, making DAOs more reliable and trustworthy today.

“We’re far enough along in the process {of DAO development} that most of the vulnerabilities have been weeded out.” said Curtis Caudill | Swarms Business Development

Swarms Explained

Since the advent of Bitcoin and The DAO hack, blockchain has come a long way. Kadena’s technology, through the scalability of Chainweb and the security and human-readability of Pact, has made it easier to launch a DAO that meets your preferences. Still, the road to building a DAO can seem complex and intimidating. Swarms is here to change that. Built on the Kadena blockchain, Swarms offers a user-friendly platform that makes creating and managing DAOs accessible to everyone.

Swarms Academy
Swarms recognized the barriers to entry and designed its platform with ease of use in mind. Their academy feature clearly explains DAO structures and operations, empowering its community to make informed decisions.

Education is key to successful DAO creation and management. Swarms doesn’t just offer a platform; they offer guidance. The entire idea behind the academy is to explain the things that people are seeing and the different choices that they have. Swarms Academy allows the entire Kadena community to learn about different options like weighted DAOs and controlled DAOs, as well as how to register a DAO as a legal entity.

Swarm’s goal with their academy is to make DAO creation and participation more accessible than ever before, and they recognize that education around DAOs has been a major missing piece to the puzzle for users.

Swarm’s Flexible DAO Structure
One size doesn't fit all, and Swarms recognizes that. Swarms offers four different DAO types: equal, weighted, controlled, and custom.

The equal feature is reminiscent of a democracy. This option gives everyone equal voting power. However, weighted DAOs, on the other hand, give more voting power to those who hold more tokens. Controlled DAOs are similar to a republic, with elected officials making proposals. Finally, custom DAOs allow for a hybrid approach, letting a community create a structure that aptly suits their needs, whatever they might be.

"I think there's another really important component to DAOs, which is inclusion and decision-making power for the people that you serve in the business. DAOs allow them to have a voice that cannot be tampered with." said Morgan Denner of Swarms Finance.

Adding to this point, Curtis Claudill stated

"[A]... DAO is a group of people, the human layer, right? All governed by digital smart contracts and algorithms. And as long as everybody understands the rules of the game, then everybody can play."

KX Feature and Grant
Swarms Finance is constantly innovating and looking towards the future. Recently, the Swarms team received a grant from Kadena to build KX, which will bring DAOs to X (formerly known as Twitter). KX will allow X users to have a DAO experience via a Chrome extension on their browser. One of the most exciting features of KX is that it lets you see your DAOs and upcoming votes directly on X. This tool makes DAO participation smoother and more accessible than ever before.

Pact and Gas Stations Make DAOs More Human-Friendly
Swarms leverages the strengths of the Kadena blockchain to provide a superior DAO experience. The team chose Kadena because of Pact, specifically its security.

Pact, Kadena's smart contract language, is human-readable, making it easier for users to understand the code behind their DAO.

Kadena's Gas Stations also eliminate gas fees, removing a major hurdle for DAO participation.

"Swarm's unique value really all comes back to Kadena. When you're building a DAO for decision-making there are going to be several transactions and those are going to be more affordable on Kadena. No one else has human-readable smart contracts like Pact. This is really cutting-edge tech that could change the world." Justin Block, Swarms’ Community Manager, said.

In Conclusion

DAOs allow you to collaborate with your friends or partners to create a transparent business where decisions can be voted on. DAOs on Kadena are particularly advanced, with Chainweb and Pact allowing security to meet accessibility. Swarms is paving the road for the future of DAOs on Kadena. Between Swarms Academy, customizable DAO options, and new features like KX, there is something for everyone to vote on the future, no matter what your purpose is for creating a DAO.