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The Scope of Running a Metaverse DAO

  • mm
    by Rahul A R on Tue Aug 2

An organizational structure has always followed a hierarchy, with the power resting in the hands of a few. One attempt to introduce a democratic economy in the modern world was through the invention of decentralized technologies such as the blockchain, and thereby crypto that maintains complete autonomy. With the introduction of newer concepts such as the metaverse, decentralization is being continued thoroughly, and projects such as the Metaverse DAO is doing more than ensuring governance by every member in a metaverse.

Read ahead about the scope of running DAOs in the metaverse for governance, ownership, earnings, and more.

  • What are DAOs?
  • What is a Metaverse DAO?
  • How do DAOs Impact the Metaverse?
  • How does a Metaverse DAO work?
  • Farm-as-a-Service


What are DAOs?

A Decentralized Autonomous Organization (DAO) has no central authority. DAOs are operated by a community working together for a shared purpose. ConsenSys defines DAOs as “governing bodies that oversee the allocation of resources tied to the projects they are associated with and are also tasked with ensuring the long-term success of the project they support.”

Related article: How does DAO Governance work, and how to launch one?

A DAO is a fully decentralized organization governed by its individual members who work together to make critical decisions about the future of a project. DAOs present an effective and safe way of working with like-minded people around the globe. DAOs have built-in treasuries that no one can access members’ approval the members. Proposals and voting processes govern the decisions in a DAO.

What is a Metaverse DAO?

The metaverse spells the next stage of digital transformation by imitating the real world in virtual spaces. DAOs can help bring structured yet decentralized governance into the jumble of DeFi, NFT, play-to-earn games, etc. Metaverse DAO is an innovative Farm-as-a-Service project based on the Ethereum blockchain that helps users earn passive rewards from yield farming across different blockchains. DAO in the metaverse makes it easy for everyone to earn farming rewards without farming on their own.

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The aim of DAOs is to improve profits exclusively for native governance token holders. For example, in the case of the popular $MDAO token, a treasury wallet provides funds for farming across different networks according to set DAO governance rules. Rewards earned by the users get automatically added to the dividends pool. As such, investors can easily claim rewards in the form of ETH or $MDAO.

How do DAOs Impact the Metaverse?

Decentralized governance tools such as MDAO focus on creating a community-led metaverse. It proposes investments in developing NFT games, play-to-earn games, and immersive metaverse experiences. They also aim to drive direct investments in teams working on a long-term vision for developing metaverse and play-to-earn games. Here, community votes given by members control the entire decision-making process.

DAOs can help shape the structure of the metaverse through the following:

  • Overall Governance
  • Credible Foundation
  • Shared Ownership
  • Inclusive Earnings
  • Achieving Shared Goals & Visions

Overall Governance

At the core level, DAOs are about governance. They allow users to use a specific consensus mechanism to vote on the direction a community or initiative will take. DAOs give members of a metaverse the power to make essential governance decisions. For instance, the primary node holders control the governance of the popular network Dash. These primary holders even control the entire fund allocation process of the platform.

Related Article: Top FAQs on Decentralized Autonomous Organization (DAO)

We can see the software code (i.e., the DAO) of the metaverse in equivalence to the physical laws of nature. As physical law decides the universe’s workings, a DAO’s software code of a DAO constrains the shape of the metaverse. So, they shape the behavior of users in online environments. Developers and companies decide all the features they must include in the DAO.

DAOs allow transparent global collaboration and coordination in online platforms such as the metaverse. A DAO system in the metaverse can automatically handle services, for example selling a property in the metaverse, while transparently recording the transaction on the blockchain, ready to be accessed by any metaverse user.

The best-suited example for a DAO is Decentraland. The platform allows users to make governance decisions like land auction protocols and content moderation policies.

Credible Foundation

The concerns raised by the anonymity of online communities are too many for the metaverse; everything in the metaverse is stored and can be verified on the blockchain. DAOs use smart contracts to offer transparent and verifiable interactions between community members. They create a trustless and credible system in which members don’t need to have trust for each other or a trusted third party but, at the same time, rely on smart contracts to offer credible and verifiable information.

Shared Ownership

DAOs can establish shared ownership schemes in a metaverse. The common example of shared ownership of an NFT might be the first thought; organizations (e.g., PangeaDAO) create metaverse land cooperatives that allow users to invest in shared land ownership schemes. Virtual land is the most expensive asset in the metaverse today. And this popularity has led to a price exceeding regular users’ buying power. DAOs enable users to purchase land as a community, delivering access to a desirable investment and democratizing land sales.

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Inclusive Earnings

DAOs allow each community member to earn money by participating in the decision-making. They essentially create a micro-economy that issues rewards to users for completing tasks. In the metaverse, concepts like play-to-earn, learn-to-earn, create-to-earn, and participate-to-earn can help users make money.

Related article: What are Move-to-Earn NFT Games and are they profitable?

For example, Axie Infinity is a blockchain-based game that rewards players with Axie tokens for growing, breeding, and exchanging NFTs. Users can then exchange these tokens for other known tokens. In addition, platforms like SourceCred interestingly reward users for merely participating in community discussions. The software follows the comments and number of likes and reactions and then grants Cred points to the user.

Achieving Shared Goals & Visions

DAOs can target specific areas and work towards achieving shared goals and visions. Let’s take an environmental objective as an example. A DAO for metaverse operating in line with this field can work as a carbon reduction fund that incentivizes users and organizations to transfer real-world, carbon-hungry activities into a sustainable virtual environment.

Related article: Different models of DAO membership

Another example could be a DAO using shared resources to hire event spaces where users can showcase their work, pay for training and education programs, or rent an online residence.

How does a DAO work in the metaverse?

The DAO focuses on the community. It envisions its development as a community-driven protocol controlled by the token holders of a particular DAO in the metaverse. Community members are privileged to guide the direction a project will take. The primary highlight in the working of a DAO is the platform’s token. Each token represents an equal share of DAO governance in a metaverse. So, more metaverse governance tokens mean more power in administrative decisions and investment guidelines.

Farm-as-a-Service

Farm-as-a-Service is perhaps the most striking highlight of metaverse DAO. In addition, yield farming enables us to make more crypto with your existing crypto. It is essentially a means of earning interest on your cryptocurrency (similar to how you’d’ earn interest on money in your savings account). Yield Farming rewards liquidity providers for staking or locking up their crypto assets in liquidity pools based on smart contracts. In return, the liquidity providers earn fees in the form of crypto.

Related article: How to build a DeFi Yield Farming dApp?

The Farm-as-a-Service aspect of metaverse DAO is worth noting because it helps to farm numerous protocols. The community can vote on the strategies for farming as well as on automatic rewards of farming returns. This enables the platform to build a reward pool for the community and give a smaller tax to those looking to enter the market, creating a low-barrier entry.

Role of MDAO Governance in Farm-as-a-Service Functionalities

The growth of a DAO in the metaverse relies heavily on the Farm-as-a-Service functionality—which draws investors to the project. Moreover, the governance dictates minimum and maximum yield rates for existing pools to define decisions on continuing stakes or re-investing from other pools.

MDAO also decides the share of funds from the treasury that can be allocated to different risk groups.

  • Low Risk: Refer to users of stablecoin and secure DeFi platforms. For low-risk groups, the volatility (the degree to which an investment’s price fluctuates) is around less than 5%, with an annual percentage yield (APY) of about 30%.
  • Mid Risk: Include entities that offer liquidity to popular metaverse and blockchain projects. Mid-risk investors hold their investments for at least a month, which maximizes the returns. As such, the volatility here ranges from 5%-40%, with the APY going up from 1000% to 5000%.
  • High Risk: Primarily includes platforms with the highest risks. At the same time, these offer the highest volatility and probably the highest possible yield.


Bottom Line

Metaverse DAO can serve as a vital tool for the metaverse to bring new definitions of an autonomous structure to a metaverse world. From decentralization benefits to revamping the organization structure to a more democratic one, DAO in the metaverse is perceived as a novel method to encourage all members of the business, such as the management, users, workers, and customers, onto the same platform for control and decision making. Moreover, It has all the necessary ingredients required for empowering community members to take control of the metaverse while allowing them to earn a passive income and reap, in the truest sense, the rewards of being an active and responsible community member.

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Rahul A R

Rahul A R is a technologist and full-stack developer who specializes in Blockchain technologies and Cryptocurrencies. Though he’s ... Read more

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