#Understanding the Funding Situation of DAO: Allocation of Internal Labor

03/30/2023 14:51 • NFT Newsflash • 122 views

On March 30th, a research report on the funding situation of DAO released by the blockchain research institute Messari showed that with the development of DAO, many DAO have adopted a workgroup structure to allocate internal labor. Over the entire 2022 period of the 10 DAOs covered, $102 million was allocated from the DAO’s treasury for internal DAO labor. More than 58% of the funds are used for product and development expenses, with the second largest category being growth (22%). Each category and its specific composition are crucial to determining the long-term success of a DAO.

Report: Product and development DAO received the most financial support in 2022

##Introduction
Decentralized Autonomous Organizations (DAOs) have been gaining popularity in the blockchain world as an innovative way to manage funds and projects. With the increasing adoption of DAOs, the allocation of internal labor has become a crucial aspect of their funding model. In this article, we’ll explore the research report released by Messari that sheds light on the funding situation of DAOs and the allocation of their internal labor.
##What is a DAO?
Before diving into the funding situation of DAOs, let’s first understand what exactly is a DAO. Simply put, a DAO is a decentralized organization that operates based on smart contracts on a blockchain network. It allows stakeholders to vote on proposals and decisions in a transparent and fair manner, thus eliminating the need for a centralized authority or intermediary.
##Allocation of Internal Labor in DAOs
As more DAOs come into existence, the allocation of internal labor has become a critical component of their funding model. According to the research report by Messari, many DAOs have adopted a workgroup structure to manage their internal labor. The report covered 10 DAOs over the period of 2022 and found that a total of $102 million was allocated from the DAO’s treasury for internal labor.
##Use of Funds in Internal Labor
The report also highlighted that over 58% of the allocated funds were used for product and development expenses, with 22% used for growth-related expenses. The remaining funds were used for a combination of marketing, governance, and legal expenses. This distribution of funds may vary among different DAOs depending on their specific goals and objectives.
##Determining the Success of a DAO
The allocation of funds for internal labor is crucial for a DAO’s long-term success. The report by Messari found that the composition of each category also plays a significant role. Product and development expenses were the highest, indicating the importance of a strong and innovative product in the success of a DAO. Growth expenses came in second place, highlighting the importance of expanding the DAO’s reach and attracting new stakeholders.
##Conclusion
The world of DAOs is becoming increasingly complex, and the allocation of internal labor is an essential aspect of their funding model. The research report by Messari shows that the funds allocated for internal labor are mostly used for product and development and growth-related expenses. The composition of these categories is crucial to determining the long-term success of a DAO.

FAQs

1. What is the purpose of a decentralized organization?

A decentralized organization or a DAO is a way to manage funds and projects without the need for a centralized authority or intermediary. It operates based on smart contracts on a blockchain network and allows stakeholders to vote on decisions in a transparent manner.

2. What is the role of internal labor in a DAO?

The allocation of internal labor is crucial for the success of a DAO. It manages the internal operations of the DAO and ensures that the funds are being used efficiently and effectively.

3. What are the essential categories for allocating internal labor in a DAO?

The essential categories for allocating internal labor in a DAO are product and development, growth, marketing, governance, and legal expenses.

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