Top DAO Tokens by Market Capitalization

DAOs, an acronym that stands for “Decentralized Autonomous Organizations,” present an interesting opportunity for crypto users around the world to engage with one another with shared principles and financial resources. With no central leadership, DAOs are considered a unit of “organized decentralization” within the blockchain community. They operate via smart contracts which are written into the blockchain, based on rules decided by the members. Specifically, these organizations spearhead a democratic style of governance for crypto users to engage towards a collective goal. Some have compared them to the corporate structure of LLCs, while others refer to them as online community organizations.

Check out our basic guide on what a DAO is.

First developed in 2016, DAOs have become a popular phenomenon in the crypto sphere as of late, allowing groups of anonymous people to contribute to something bigger than themselves. DAOs can invest with a pooled sum of money, allowing its users to purchase assets with larger amounts of money that would otherwise be impossible as an individual. Several DAOs have come together to purchase miscellaneous items like rare NFTs, golf courses, valuable Wu-Tang Clan albums, etc. A DAO even attempted to purchase an authentic copy of the U.S. constitution, but they were eventually outbid.

There are a number of more practical uses for DAOs, including assisting freelancers by pooling money to access necessary subscriptions and employee benefits. Other DAOs aim to assist marginalized artists with financial and creative support, and help with funding their projects.

However, there are some risks when it comes to DAOs and their investments due to their vague legal status. For example, if a DAO gets hacked or files for bankruptcy, each member can be made liable for the entire sum of funds lost, regardless of how much a member invested. Moreover, the lack of regulatory framework can also prevent DAOs from engaging with certain commercial or legal contracts that may be necessary to achieve their mission. To offset these potential issues, many believe that DAOs should register as legal entities.

What Are DAO Tokens? How Do They Work?

Not all DAOs are financed via tokens. Some simply operate as investment funds. However, when a DAO does issue their own DAO token, these tokens work to both supply funding for the organization and provide voting rights for token holders. Each token holder can vote on certain issues and are granted influence based on the quantity of their holdings. However, some are concerned that this weighted voting status contributes to greater plutocracy in the blockchain world.

In order for a DAO to succeed, its members need to be actively involved. Thus, to promote member participation, DAOs provide rewards for voting on various proposals and other updates. Once a consensus is reached, these proposals can become integrated into the network.

The more involved token holders become, the greater the value of the DAO and its token. Some have compared this structure to holding equity in a firm that later takes off. Therefore, a well operated DAO will typically experience greater success and see its token increase in value. Internally, there are management and administrative jobs to help ensure that the DAO operates smoothly. Often, these employees get paid in tokens to further incentivize the development of the DAO.

Find out more about the top 10 DAOs and how they work.

Some of the most successful DAO tokens by market capitalization include UniSwap, AAVE, MakerDAO and DASH. For a full list of high performing DAO tokens, CoinMarketCap provides up-to-date, real-time data on DAO tokens by market capitalization.

Check out our comprehensive overview of the DAO ecosystem and how their governance system works.