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Apr 27 • 27 mins

Understanding DAO and NFTs



NFT development has revolutionized various industries by providing investors, traders, and global corporations with new ways to make money, such as tokenizing assets. NFT marketplaces allow users to create, mint, buy, and sell tokens daily.

Every NFT marketplace offers unique benefits to its active users. For example, some platforms simply provide a marketplace where users can show off their digital collectibles and participate in trading. Other platforms focus on engaging users in multiple games and rewarding them through NFT staking.

According to blockchain experts, NFT marketplaces tend to improve themselves with new ideas and features.

In this article, we will discuss the key aspects of DAO-based NFT platforms, how they differ from traditional platforms, and the advantages they offer.

What are DAOs?

DAO stands for Decentralized Autonomous Organization. It is a community-led organization that guarantees voting rights to their holders. DAOs are based on smart contracts that automatically execute and perform actions when predefined conditions are met.

As the name implies, DAOs are decentralized and autonomous. DAO’s rules are stored on an open-source blockchain, so anyone can view their code and transaction records. There is no central governing body, so community members can initiate changes and then vote on them.

A DAO operates much like a corporation, except that it doesn’t have a hierarchical structure. This form of legal structure aims to provide more democracy through decentralized governance. Unlike a traditional organization, members of a DAO are not bound by a formal contract. Instead, they are bound together by a common goal or incentives written into the rules.

To sum up, let’s take a look at the key takeaways about decentralized autonomous organizations.

  • A decentralized autonomous organization is a legal structure in which token holders participate in the decision-making and management of an entity.
  • There is no central governing body, and power is shared among token holders who cast votes together.
  • All activity and votes in the DAO are recorded on a blockchain, making all user actions publicly accessible.
  • Every DAO must put security first because vulnerabilities can cost a DAO millions of dollars in savings.
  • One of the first DAOs was founded by developers who wanted to automate decision-making and facilitate cryptocurrency transactions.
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How do DAOs work?

Decentralized autonomous organizations rely on a set of rules and regulations defined by a smart contract on a blockchain. First, smart contracts are open protocols programmed to execute when predefined criteria are met. In addition, they become immutable right after deployment. Smart contracts are publicly available and verifiable, allowing any member to view the contract, financial transactions, and decisions of the DAO.

Thanks to smart contracts, DAOs are completely transparent. And because DAOs are decentralized, there is no central authority that can change the rules in the smart contract. Instead, any change can be made by a majority vote of the community.

After that, the platform should decide how to accept investments and provide governance. To participate in a DAO, a person must own a token. Token ownership comes with governance and voting rights. The more tokens a person owns, the more voting power they have.

These rights can influence decisions in the organization by creating proposals and voting for or against them. Proposals typically involve decisions about the future of the organization, the distribution of funds, and more. In addition, a proposal must receive the votes of the majority of token holders and comply with the DAO’s rules and regulations in order to be passed.

In general, the DAO platform is funded by selling its governance tokens through public or private offerings. However, in certain cases, users don’t have to invest in the organization to become members.

Finally, no one except those who developed the original smart contracts can change the rules and regulations of the DAO, while stakeholders determine the future of the platform.

How are DAOs and NFTs connected?

Now that you know the basics of a DAO, let’s see how it relates to NFTs.

One of how DAOs and NFTs are closely linked is in the form of community governance. DAOs can help create NFT projects through community governance. This allows community founders and members to collectively make decisions and suggest ideas for further development of the NFT project.

However, the connection between NFTs and DAOs isn’t limited to community governance. A collector DAO is another form of connection between DAOs and NFTs. A collector DAO is an organization that puts together funds to purchase and issue NFTs.

Investing in an NFT project, especially a popular one, often calls for significant capital, which can be difficult for smaller traders to afford. Collector DAOs are the solution to this problem, as they allow multiple individuals to own a fraction of an NFT. The APE DAO is an example of a collector DAO. It fractionalizes NFTs from the Bored Ape Yacht Club collection, allowing multiple users to own fragments of the same asset.

In addition, DAOs have the potential to help smaller NFT creators and projects build a dedicated community. Unlike celebrities and famous artists who already have a respectable fan base, emerging creators are less likely to have a dedicated community from the start. Similar to a crowdfunding platform, collector DAOs can help raise funds and build engaged communities for various NFT projects by allowing users to vote for the projects they most want to see succeed.

Evolution of NFT platforms: before and after DAOs

digital NFT

NFT platforms before DAOs

Smart contracts are used to implement non-fungible tokens on a blockchain. Each NFT minted on the blockchain protocol contains unique information known as Metadata. Therefore, an NFT marketplace or platform can’t be centralized. Nevertheless, the founders of the blockchain protocol have control over several decisions, such as announcing upgrades, creating rules, and launching features on the blockchain.

For instance, an individual can’t control or own a marketplace built on top of the Ethereum protocol. The right to decide what implementations are needed to maintain the longevity and successful growth of the network belongs to its original creators. Therefore, users don’t have the right to decide the future of the protocol and can’t vote to support a decision or initiate a change to the protocol. The lack of user sovereignty makes conventional NFT platforms an incompatible solution for users.

To sum up, the key features of NFT platforms without DAOs include:

  • The platform owner is the ultimate authority and is responsible for platform-related decisions.
  • A governing entity may close the centralized platform.
  • The platform owner can change the functionality of the platform and add features.
  • Traditional NFT platforms take time to implement upgrades.
  • Traditional NFT platforms don’t have broad functionality.

NFT platforms after DAOs

DAOs provide a distributed decision-making system that brings greater transparency. It automates the governance of NFT platforms and allows users to actively participate in deciding the future of the platform. In addition, DAOs can remove the barriers to decision-making. Therefore, users have the power to vote and change the governance of the platform.

Rather than having stakeholders trust a manager or CEO, DAOs aim to distribute the power to control the organization among the users who run the NFT platform. For example, if five members together create an organization, they can vote and initiate governance changes.

With many people participating and contributing to the success of a DAO, DAO-based platforms provide quick and efficient solutions more easily than traditional ones. Because of the potential benefits of autonomous organizations, most companies prefer DAOs to take advantage of decentralized governance.

To sum up, the key features of NFT platforms with DAO are as follows:

  • The community can make all decisions on the NFT platform.
  • Users can participate in changing features and functions by voting.
  • Users can understand how the platform works.
  • Users can implement any changes immediately because smart contracts support the functionality.
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Types of DAO-enabled NFT platforms

Let’s take a look at the types of DAO-enabled NFT platforms.

  • Collector DAO. As the name suggests, NFT platforms of this type are used by companies to enable collective ownership and fractionalization of NFTs.
  • Investment DAO. This type of NFT platform is designed for decentralized finance projects. These platforms support pooling and investment operations for multiple DeFi projects.
  • Media DAO. This type of NFT platform is an aggregator of decentralized news that works in favor of consumers. Enterprises continue to monitor innovations on the DAO horizon to find the most appropriate model for automating their business processes.
  • Operating system DAO. These platforms are designed to help other organizations create and establish their own DAOs.
  • Protocol DAO. These platforms use voting mechanisms to implement decisions regarding protocol changes.
  • Service DAO. These platforms help companies manage their sourcing and talent acquisition processes.
  • Social DAO. As the name implies, these platforms are designed to manage, support, and regulate decentralized social media platforms.

How can DAO-enabled NFT platforms benefit users?


DAOs have a high level of community involvement, which allows users around the world to stay in touch and work on common goals. Because the decision-making process is not limited to a DAO boardroom or authority group, all participants contribute in ways that increase productivity. As a result, there is room for improvement from both the organization and the users.


The basic principle of a DAO is decentralization, so users don’t have to worry about hierarchy or a central authority that can change the platform without their consent. DAO-based platforms are designed to empower members and keep them an integral part of key decision-making processes.

Income and rewards

The hype around game-based NFT platforms continues to grow, as these platforms are adventurous and offer many rewards and income opportunities for users. For example, a DAO allows an NFT platform to offer NFT staking. It helps NFT holders earn passively by locking their NFTs and staking them into the liquidity pools, all without having to sell the tokens.

In the future, we will see more interesting ways to monetize digital assets. NFT staking platforms have already become mainstream, allowing NFT owners to profit from them.

NFT battles

Decentralized applications allow NFT platforms to offer “NFT Battles” to their users. This allows NFT owners to stake their assets against other NFT owners or competitors. Other users participating in the battle can stake their NFTs to support their favorite NFT and earn rewards in digital assets. Every battle on the NFT staking platform has five stages: NFT staking, voting, NFT pairing, battling, and displaying results.

NFT Yield Farming

Those users who hold both NFTs and the NFT platform’s native token can participate in Yield Farming. They need to place their eligible assets directly into the platform’s liquidity pools in order to provide liquidity to the platform and receive rewards. The rewards are typically in the form of limited-edition NFTs. However, not every staker can be rewarded with rare NFTs. They must first verify the eligibility of their NFTs and then stake the tokens.

Yield Farming is administered through DAOs, so it is completely transparent and fair. Users can see how their rewards are determined and check their eligibility for special rewards, as no information or process is hidden.


DAOs act as a decision-making tool for NFT platforms. While NFTs are large in numbers with multiple varieties, the demand for gaming-based NFT platforms is constantly increasing. The involvement of a DAO can make a gaming NFT platform more beneficial to the users.

  • With the help of DAOs, users gain the right to review policies related to content moderation, asset policy, and auctions.
  • DAOs own digital assets (NFTs) and smart contracts to bring autonomy, removing the concept of CEO and leadership from NFT platforms.
  • Users can stake their NFTs and native tokens in the decentralized application (dApp) to generate rewards out of them.
  • Users retain complete control over their tokens, even when they are staked or delivered to the liquidity pool.
  • DAOs allow communities to make decisions and vote on key aspects of any platform, including NFT auctions, battle launches, contract policy changes, marketplace decisions, etc.

In addition, users can initiate changes to the underlying NFT platform governance by voting on a number of issues:

  • Addition of new assets such as game characters, marketplaces, wearables, etc.
  • Dates and policies for live auctions.
  • Enhancement of functionality on the NFT platform.
  • Replacement or addition of members to the Security Council.
  • Tokenomics of the platform-burning mechanism and token supply.


DAOs are built on open-source software, so votes are publicly visible. This tends to instill a sense of accountability and responsibility in each member. And because the decisions they make are visible, voters strive to act in ways that benefit the reputation.

Voting power

DAO-based NFT platforms are quite similar to traditional NFT platforms, but the difference reflects the governance model and ownership policies. Users in a DAO-powered platform can make important decisions by voting in three simple steps: proposals, votes submitted, and outcomes.

DAO-based NFT platforms use member votes to change policies and existing rules of the platform and to award grants. DAOs allow all users to play an important role in the decision-making process and determine policies for the future of the community through distributed and transparent decision-making.

Because the DAO NFT platform is decentralized, it encourages better participation than traditional platforms. Members feel empowered when they have voting rights. This model aims to bring uniformity, allow community members to participate equally in the governance of the NFT platform, and provide solutions through their participation.

The DAO-NFT community

Decentralized Autonomous Organizations have the potential to support emerging NFT creators and help them foster a sense of community, bring together a group of investors to take part in closed community events, raise funds, and provide access and voting rights to smaller NFT projects. What’s more, users can come together across multiple social networking platforms to discuss and agree on a common mission for the DAO. In addition, users can contribute funds through the development of Ethereum smart contracts.

Furthermore, control and ownership are more democratic in a DAO. For example, there are early adopter benefits when deciding to join an NFT project, where investors get rights to lower fees and discounts on products.

In today’s borderless world, DAOs can bring global communities together to coordinate and collaborate on their common vision. With governance tokens and an Internet connection, anyone can easily participate in building the future of Web3 within a DAO.

Being part of a DAO gives users a sense of ownership similar to being a co-founder of a startup, as they can manage the investments of the project’s treasury, which is controlled by a multi-signature crypto wallet. This encourages further innovation and even financial rewards.

Some popular NFT DAOs


ape day

The APE DAO was founded by Kylo.eth, the Bored Apes collector. They fractionalized a female CryptoPunk and 49 NFTs from the Bored Ape Yacht Club NFT collection into 1,000,000 APED tokens to start the DAO. This allowed anyone to own pieces of these highly desirable NFTs as part of their DAO. The tokens sold out in just four days, making the DAO a huge success.

Later, DAO members donated more NFTs, such as Avastar, CyberKongz, Punk’s Comic, etc. The community manages the DAO through $APED shards.

Battle Infinity

battle infinity

Battle Infinity is an NFT DAO that combines P2E gaming and Web3 technology. It is developing Battle Arena, a metaverse-based game, to provide a gaming ecosystem in a virtual world. Its users can participate in 6 different play-to-earn games. They need to stake the IBAT utility token to join the Battle Stake. In addition, 10% of the staked tokens are used for transaction fees, 50% of which are transferred to a global liquidity pool.

Decentraland DAO


The Decentraland NFT DAO uses a combination of free off-chain voting for its community, allowing LAND, MANA, or NAME token holders to join the decentralized autonomous organization. Users can create and vote on proposals using the platform’s governance dApp or Snapshot, an off-chain voting platform, so they don’t have to pay fees every time they open or vote on proposals. What’s more, members can use the Decentraland Forum to discuss the DAO.

Jenny Metaverse DAO

Jenny metaverse

The Jenny Metaverse DAO is built on the Unicly platform. It purchases NFTs and stores them in a vault, while its native uJENNY tokens represent the NFTs. Token holders get governance and voting rights to make decisions about buying new NFTs, releasing tokens from the vault, etc.

Lucky Block

The Lucky Block DAO is one of the leading NFT DAO projects and one of the coolest crypto gaming projects. Members of the DAO can win daily prizes and have a chance to win millions of dollars. Chainlink’s transparent VRF service helps determine the winners. Prizes are awarded in the form of LBLOCK tokens, the DAO’s native token.


SharkDAO brings together a group of strangers who put their money together to buy rare NFTs. Unfortunately, it only focuses on Nouns, a generative art NFT project. So far, SharkDAO has bought 5 NFTs from the Nouns collection and includes about 400 members, called ‘Sharks’, who collectively have raised 1000 ETH. Members receive SHARK tokens in exchange for ETH to participate in the governance.


The Tamadoge NFT DAO is another addition to the Doge community in the Tamaverse. Unlike Dogecoin, this DAO doesn’t rely on the influence of NFT celebrities. It provides a multi-utility token and P2E platforms where players compete to earn TAMA tokens. Users can also create, breed, and trade dogs, just like the Tamadoge pets. The sense is to develop these pets to earn as many points as possible on the monthly leaderboard.



YGG DAO focuses on in-game assets from blockchain-based and NFT-based games. Initially, the co-founders of Yield Guild managed all assets, but then YGG issued the YGG token to members. Hence, token holders can vote on decisions related to the governance and future of the platform and participate in various activities.

What’s next for NFTs and DAOs

Innovation and the constant evolution of technology have become an essential part of the digital world. Therefore, DAOs represent the next stage of technological evolution, as they replace the centralized infrastructure of an organization with blockchain, a decentralized technology.

As for DAOs and NFTs, they raise the philosophical question of what is the next frontier in the peer-to-peer economy and how Web3 providers can make it more accessible to the next generations. Regarding DAOs, we will certainly see more and more unique use cases, such as the distribution of art and music, the purchase of high-value assets, and much more.

There are more emerging case studies that show the collaboration between DAOs and NFTs. Now we can see how these DAOs, using the co-op organizational structure model, are providing new opportunities for participation for people who have joined the creator economy and are participating in their own way. The combination of assets and community will continue to improve as DAOs provide new entry points for people, while NFTs provide ownership and real-world benefits.

As both traditional and crypto markets anticipate challenging times ahead, people are looking for ways to protect and grow their savings with the help of Web3 tools.

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Closing thoughts

Decentralized autonomous organizations are often described as the future of blockchain and work. As a concept and a technology, DAOs are rapidly changing the structure of a legacy business by empowering platform members and eliminating centralized leadership.

DAOs support any revolutionary solution, from a crypto trading platform to an NFT marketplace or metaverse projects. Understanding the power of a DAO-based platform and the benefits it provides to businesses and users, companies realize the potential of DAO development. For example, such platforms help build trust among users and investors, which can be key to a successful project.

Nevertheless, you need to adapt to the current market trends. Don’t hesitate to contact our blockchain experts to discuss your future DAO NFT project.

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    About the author

    Dmitry K.

    CEO and Co-founder of ND Labs
    I’m a top professional with many-year experience in software development and IT. Founder and CEO of ND Labs specializing in FinTech industry, blockchain and smart contracts development for Defi and NFT.

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