XDAO

<h2 id="header-0"><strong>TL;DR</strong></h2><ul><li>The world of decentralized autonomous organizations (DAOs) has experienced massive growth in the past year.</li><li>10,752 organizations launched with a total treasury holding of over $9 billion.</li><li>The best way to create a DAO is by using DAO builders.</li><li>DAO hacks are still plentiful in 2022, and they occur not only at the smart contract level, but also at the management level. XDAO continually strives to identify flaws in the DAO and makes every effort to address critical issues.</li><li>In 2023, XDAO will get some brand-new features.</li></ul><p>Over the years, DAOs have grown exponentially and gained popularity among investors and enthusiasts. In April 2022, the total amount in DAO treasuries exceeded <a href="https://deepdao.io/organizations" rel="noopener noreferrer nofollow">$11 billion across 10k organizations</a>. Countless DAOs have appeared around the world, some of which can be called successful experiments and others — not so much.</p><h2 id="header-1"><strong>In 2022, DAOs continue to take over the world</strong></h2><p>2022 saw a revolutionary change in the way organizations were run and managed globally. The concept of DAOs began to take hold as more and more individuals and organizations adopted the technology. With the help of DAO builders such as XDAO, these organizations were able to take advantage of the new system to manage their assets and streamline their development. This marked a turning point in history as DAOs took over the world.</p><h2 id="header-2"><strong>DAOs built in 2022: good and bad</strong></h2><p>In December 2022, the number of DAOs on the blockchain skyrocketed, with a total of 10,752 DAOs and subDAOs recorded by <a href="https://deepdao.io/organizations" rel="noopener noreferrer nofollow">DeepDAO</a>. <a href="https://dune.com/anngel/XDAO-Statistics" rel="noopener noreferrer nofollow">Dune analytics</a> held a record of 78 DAOs launched by XDAO on the Ethereum blockchain, 2,636 on the BSC blockchain, and 18,997 on the Polygon blockchain. These numbers show the increasing popularity of DAOs and their potential to revolutionize organizations around the world.</p><p><img src="https://miro.medium.com/max/1400/1*kLIESDRIAQEHTbIHwz-ylw.png" /></p><p>DAO created since Nov 2021</p><p>Who are these DAO and what do they do?There are many DAOs on the XDAO platform that do a variety of activities, from maintaining DeFi protocols to venture capital investment. These DAOs are using blockchain technology to ensure transparency and accountability in their operations, and many are finding success in doing so.</p><p>One such example is the <a href="https://hefi.io/" rel="noopener noreferrer nofollow">HeFi DAO</a>, a healthcare startup that has embraced the transparency and accountability offered by a DAO structure. This has allowed them to build trust with their community and continue to grow and thrive in a competitive industry. Read also “<a href="https://blog.xdao.app/the-story-of-medtech-startup-that-could-have-survived-520f21084e14" rel="noopener noreferrer nofollow">The story of Medtech startup that could have survived</a>” in our blog. Similarly, the <a href="https://www.exponentialhealthtech.com/" rel="noopener noreferrer nofollow">Exponential Healthtech</a> DAO has a thriving community of over 1,000 active members and is making a positive impact in the digital health sector. <a href="https://www.exponentialhealthtech.com/a-dao-with-a-global-purpose-in-digital-health/" rel="noopener noreferrer nofollow">Read about its usecase</a>.</p><p>XDAO is also used by VC funds that have converted to a DAO structure to increase transparency and reduce risk for their investors. The trend of VC funds becoming DAOs is expected to accelerate in the coming years, particularly in light of the lack of transparency that led to the collapse of FTX/Alameda.</p><p>One of the successful VC fund on XDAO is the <a href="https://blog.xdao.app/about-dao-ark-db040f8192f1" rel="noopener noreferrer nofollow">DAO Ark</a>, which not only invests in crypto assets but also in physical assets such as gold and real estate.In addition to these traditional industries, XDAO is also used by DeFi projects to protect their token investors from scams by storing their tokens in the DAO treasury, protected by multisig. We will see why this is important next with examples of the biggest scams that occurred in DAO in 2022.</p><p><em>Here are some DAO lessons of 2022 we need to learn from:</em></p><h2 id="header-3">1. Olympus DAO</h2><p>In October 2022, an <a href="https://twitter.com/peckshield/status/1583416829237526528?s&#61;20&amp;t&#61;Pxxy_BiC_XH01fvXAsxosg" rel="noopener noreferrer nofollow">attack was launched against OlympusDAO</a>. The attacker stole about 30,000 OHM tokens using a smart contract vulnerability. The incident took place because the redeem function in the smart contract failed to properly validate the hacker’s malicious transfer request before allowing them to redeem tokens. The hacker was able to drain approximately $292,000 in tokens from the project as a result of this lack of validation.OlympusDAO, fortunately, came to an agreement with the hacker and announced that <a href="https://twitter.com/peckshield/status/1583470179803049984?s&#61;20&amp;t&#61;SAhp2Uy6-fMoGVrKNshfkg" rel="noopener noreferrer nofollow">all funds had been returned.</a></p><h2 id="header-4">2. Mango DAO</h2><p>MangoDAO, a decentralized autonomous organization that operates on the Solana blockchain, was also hacked in October 2022.</p><p><a href="https://mango.markets/" rel="noopener noreferrer nofollow">MangoDAO</a> explained that their treasury was <a href="https://www.bankinfosecurity.com/everything-we-know-about-mango-markets-hack-a-20250" rel="noopener noreferrer nofollow">drained</a> by a hacker who manipulated collateral value and took out massive loans from MangoDAO treasury. The lack of liquidity between MNGO and the USDC stablecoin, which was used as the price reference for MNGO perpetual swap, on the exchange market was the source of this vulnerability. The hacker increased the price of MNGO from $0.038 to a high of $0.91 <a href="https://twitter.com/mangomarkets/status/1580053208130801664?s&#61;20&amp;t&#61;l1a1L8cIciGDq2wN1YAcwQ" rel="noopener noreferrer nofollow">using two addresses, enabling them to take out large loans from MangoDAO</a>.</p><p>The Mango team quickly came to an agreement with the attacker to return <a href="https://cointelegraph.com/news/mango-market-s-dao-forum-set-to-approve-47m-settlement-with-hacker" rel="noopener noreferrer nofollow">$67 million of the stolen tokens and keep $47 million</a> as a bug bounty reward.</p><h2 id="header-5">3. Merit Circle DAO</h2><p>This case is a legal precedent rather than a hack of the management system. Following a vote at a member meeting, the partnership between two outstanding play-to-earn communities, <a href="https://meritcircle.io/" rel="noopener noreferrer nofollow">Merit Circle DAO</a> and <a href="https://yieldguild.io/" rel="noopener noreferrer nofollow">Yield Guild Game </a>(YGG), came to an end. Merit Circle community decided to <a href="https://twitter.com/itstimconnors/status/1536734104422522881?s&#61;20&amp;t&#61;9RQS4kaXG83PsXlkwoG7CQ" rel="noopener noreferrer nofollow">buy out YGG’s investment and return their seed tokens</a>. This action would allegedly give them control of the company, while YGG, an early investor in Merit Circle DAO, claims that their investment was made purely for fundraising purposes and was never intended to gain a controlling position.</p><p>Members of YGG opted to part ways with Merit circle by selling their stake for <a href="https://vote.meritcircle.io/#/proposal/QmanW7dTyF2LvvU9iAGwj3i9D4F3TS7ZbxR33jVCmKMrgR" rel="noopener noreferrer nofollow">1.75 million USDC after two rounds of voting</a>.</p><h2 id="header-6">4. Beanstalk DAO</h2><p>It might surprise you how much can occur in just 13 seconds. It is true that <a href="https://bean.money/" rel="noopener noreferrer nofollow">Beanstalk DAO</a> was the victim of a 13 seconds <a href="https://twitter.com/BeanstalkFarms/status/1515700678454390785?s&#61;20" rel="noopener noreferrer nofollow">hack in April 2022</a>.</p><p>The attack was made possible by a flash loan which allowed the hacker to borrow nearly $1 billion in cryptocurrency assets and exchange them for native bean tokens. The hacker took advantage of the native tokens gaining themselves a 67% majority vote and getting away with <a href="https://bean.money/blog/beanstalk-governance-exploit" rel="noopener noreferrer nofollow">approximately $77 million worth of crypto</a>. The stolen funds were then <a href="https://twitter.com/CryptoShine/status/1515678389394456579?s&#61;20&amp;t&#61;Ho6DqDLOj3nbOXlDEplVJw" rel="noopener noreferrer nofollow">laundered through Tornado Cash</a>.</p><p>Less than a month after the attack, Beanstalk DAO <a href="https://snapshot.org/#/beanstalkfarms.eth/proposal/0x54fa850db378e89e78308d082230ca5c9cce921c892008c0d34fcc4c20b535f3" rel="noopener noreferrer nofollow">voted in favor of a proposal</a> that permitted the project’s core team to <a href="https://www.theblock.co/post/146068/hacked-stablecoin-beanstalk-seeks-to-borrow-77-million-to-revive-itself?utm_source&#61;cryptocompare&amp;utm_medium&#61;rss" rel="noopener noreferrer nofollow">borrow $77 million</a> from private investors and reinvest in the project.</p><h2 id="header-7">5. Fortress DAO</h2><p><a href="https://thedefiant.io/fall-fortress-dao-olympus-forking" rel="noopener noreferrer nofollow">The demise of Fortress DAO</a> inspired a cautionary tale for the community of decentralized organizations.</p><p>The fall came as a shock to the blockchain and crypto world, most especially to those associated with the project. FortressDAO had enjoyed a period of success and was one of the earliest adopters of DAOs with a $14M treasury held up in the Magic Internet Money stablecoin. Following an alleged identity <a href="https://thedefiant.io/frog-nation-wonderland-fate" rel="noopener noreferrer nofollow">scandal</a> involving Frog Nation’s <a href="https://thedefiant.io/frog-nation-cfo-quadrigacx" rel="noopener noreferrer nofollow">Chief Financial Officer, Sifu</a>, the company’s holdings in the Magic Internet Money stablecoin were compromised. To secure their assets, FortressDAO moved their entire treasury into an interest-bearing stablecoin which was created and governed by <a href="https://twitter.com/cofromthemo/status/1490673392923693059?s&#61;20&amp;t&#61;jnXG_Ep-LOlwPU-3BjwefA" rel="noopener noreferrer nofollow">Avraham Eisenberg</a> (the same guy who stands behind MangoDAO hack&#x1f631;) called “Fortress USD” (FUSD). The whole $14 million in treasury was transfered to Eisenberg’s FUSD and was held in his private wallet.</p><p>Fortress DAO <a href="https://snapshot.org/#/fortressdao.eth/proposal/0xa20a28d29aad5aa461891a59e981a7e91422ef39aa88bd15b74bba2269cae59a" rel="noopener noreferrer nofollow">voted to fund the creation of FUSD</a> out of the Fortress treasury. The community seemed to believe that it was funding the creation of a project it had authority over, giving Fortress DAO a small amount of inherent value. But Eisenberg built the whole thing and controlled all FUSD’s smart contracts.</p><blockquote>Share in comments which DAO hack of 2022 we missed!</blockquote><p>What can we expect to see in 2023?</p><p>As the future of decentralized autonomous organizations (DAOs) continues to show great potential, the recent spate of hacks and resulting loss of money has caused concern among many communities. XDAO is working hard to identify and address any flaws in these types of organizations, and there are a few key points to keep in mind to ensure the safety and stability of your DAO:</p><p><strong>First</strong>, if all of a DAO’s funds are held in a single developer wallet, it’s a major red flag — just look at the Fortress DAO for an example of what can go wrong. <strong>Additionally</strong>, if a DAO lacks any rules governing what its members can vote on, it’s another warning sign — the Merit Circle DAO is a prime example of this.</p><p>To ensure the smooth operation of your DAO, it’s crucial to have a system of checks and balances in place, with votes evenly split among members who represent a diverse range of interests. It’s also important to follow any relevant regulations or rules to ensure compliance. By keeping these points in mind, you can help ensure that your DAO remains stable and secure.</p><blockquote><em>This and many other things are important in a DAO and it is our responsibility to establish this norm moving forward in 2023 and beyond.</em></blockquote><p>As the market leader <a href="https://daoscanner.io/" rel="noopener noreferrer nofollow">among DAO builders</a>, XDAO is always pushing the limits of what can be achieved with decentralized autonomous organizations. In 2023, we have some truly game-changing projects in the works that will XDAO to the next level. Here are just a few of the exciting developments we have planned:</p><ul><li>The launch of our unique DEX, which will allow DAOs to list their tokens quickly and easily, with built-in protections against scams and the opportunity to earn commission fees;</li><li>A major redesign of the platform that will simplify and enhance the user experience on the platform;</li><li>The development of a legal framework to safeguard DAOs in various jurisdictions;</li><li>The release of new features and tools to make it even easier for users to create and manage their own DAOs;</li><li>The expansion of our partnerships and collaborations with other leading protocols in the industry.</li></ul><p>We are confident that these initiatives will help us to continue leading the charge in the world of DAOs and to drive even more adoption and innovation this year.<br /></p><p>If you want to be part of the fun and close-knit XDAO community, join any of our social networks:</p><p><strong><a href="https://xdao.app/" rel="noopener noreferrer nofollow">Website</a> | <a href="https://twitter.com/xdaoapp" rel="noopener noreferrer nofollow">Twitter</a> | <a href="https://t.me/xdao_eng" rel="noopener noreferrer nofollow">Telegram</a> | <a href="https://youtube.com/channel/UCC58I-ghebVRepbwVsyJnCQ" rel="noopener noreferrer nofollow">YouTube</a> | <a href="https://discord.gg/XAa64ABVd7" rel="noopener noreferrer nofollow">Discord</a> | <a href="https://www.instagram.com/xdaoapp/" rel="noopener noreferrer nofollow">Instagram</a></strong></p>

DAO Performance in 2022: Overview from XDAO and Expectations for 2023

Table of Contents

XDAO APP

Other articles published on Jan 11, 2023

China-based Businesses Show Signs of Reentry into the Crypto Market

BelNet Exit Node Selection Criteria & New Reward Plan

“Altcoin FOMO” in the Market – These Coins to Explode in 2023

HBIT Blockchain EcoSystem

Hal Finney Remembered For His First Bitcoin Tweet

KuCoin Adds Three New Digital Assets in One Day

Join our free newsletter for daily crypto updates!