Decentralised Autonomous Organizations (DAOs) are shaping the future of governance, investment, and collaborative decision-making in the digital realm.
These entities (more) closely align with the democratised vision of the blockchain – offering transparency and inclusivity for its members. However, as the DAO ecosystem grows, so do the challenges of securing and managing digital assets within these organisations.
Table of Contents
What is a DAO ?
A DAO, is a self-governing and decentralized entity that operates on blockchain technology. It’s governed by a set of smart contracts and rules encoded on the blockchain, rather than by a central authority or intermediaries. DAOs are designed to facilitate collective decision-making and the management of digital assets, often using cryptocurrency tokens as voting power.
How a DAO works ?
DAO governance model explained
At the heart of every DAO is its governance model.
This model defines how decisions are made within the organisation. Unlike traditional centralised entities, DAOs rely on token-based voting systems, allowing token holders to participate in governance decisions proportional to their holdings of that DAOs token – the most popular example of this would be something like Uniswap.
DAO treasury management
DAO compensation distribution
In a DAO, contributors are rewarded for their efforts. Compensation distribution mechanisms are encoded in smart contracts and can be based on various factors such as work completed, contributions to decision-making, or other predefined criteria.
DAO access control
Ensuring the right individuals or entities have access to specific functions within a DAO is essential for security and efficient operations. Access control mechanisms and permissions are integral to DAO security.
Recent history of DAO
DAOs have gained prominence in recent years due to their transparent and inclusive nature. One notable example is “The DAO,” a decentralized venture capital fund that raised significant funds but faced challenges, including a major hack. Despite setbacks, DAOs continue to evolve and thrive in various forms.
How to Manage and Secure Your Digital Assets for a DAO?
atato Custody Solutions for DAO
To address the unique security and management needs of DAOs, atato Custody offers comprehensive solutions that align perfectly with the needs of DAOs.
atato Custody Smart Features for DAO
- Compliance: atato Custody complies with the most rigorous of regulatory frameworks, ensuring that your digital assets are managed within a legally sound framework. atato is one of the few custody solutions compliant in Asia and Europe.
- Cost-Effectiveness: Affordable digital asset custody with unlimited wallet creations, offering flexibility and scalability for DAOs of any size. atato doesn’t charge any AUM or transaction fees and charges a fixed price per wallet. Different to other custody solutions that become more expensive as your assets under management go up.
- Hot Wallet Solution: Benefit from a secure hot wallet solution that provides swift access to your digital assets while maintaining ownership of your private keys. atato uses MPC security to cryptographically encrypt keys and distribute them amongst parties in shards. This ensures protection against internal fraud as well as external hacks since no one truly ‘owns’ the keys.
- Blockchain Flexibility: atato Custody supports a wide range of digital assets, including Ethereum, ERC20 tokens, and other ERC standard-based tokens on various networks, such as the Ethereum mainnet, Binance Smart Chain, or Polygon. atato also supports non-EVM chains like Avalanche, Solana, Cosmos and more. All of the chains can be added without code, helping you save precious developer resources.
What is a Workspace and Why is it Ideal for DAOs?
atato Custody introduces the concept of a “Workspace,” which is a private and confidential instance where you can manage and organise your wallets, users, and approvers to meet your specific business needs. Think of it like a Slack workspace, which serves as secure working spaces for your digital assets.
What are Approvers?
Approvers play a crucial role in atato Custody, providing cryptographic approvals for wallet operations. They are divided into two types: Wallet Admins, who approve wallet updates, and Transaction Approvers, who specifically handle transaction approvals.
Create an Approver
Adding an approver to atato Custody is a straightforward process. After creating an approver, you’ll receive an activation code, which you can use to securely connect your mobile approver application to your atato Custody workspace.
Install the App
Start by downloading and installing the free atato Custody mobile application from the Apple App Store or PlayStore. Ensure your device utilises both FaceID and a passcode for added security.
Activate the Approver
Once you’ve configured the atato Custody app, log in to your workspace and activate your approver. Congratulations, you’ve now enhanced the security of your wallets!
Use the Approver as Wallet Admin
Approvers can act as wallet administrators, reviewing and approving or rejecting changes made to wallets. This ensures that wallet-related operations are carried out securely.
Use the Approver in Rules
Approvers can also be integrated into wallet rules, allowing you to set criteria for transaction approvals. For instance, you can require the approver to manually review and approve transactions. You can also require an approver to blacklist certain addresses or ensure they approve transactions above a certain amount.
Approve Wallet Admin Request
After creating a wallet, you’ll receive a request on your custodial mobile app to approve yourself as the new wallet’s admin. This step is crucial for activating the wallet and ensuring its security.
What are Wallets?
In the world of DAOs, wallets serve as containers for your digital assets and cryptocurrencies. Each wallet can hold various types of tokens from specific networks. Wallets are governed by wallet administrators, and you can create multiple wallets within a workspace.
How Do We Use Wallets?
Before creating a wallet, it’s essential to determine wallet administrators and wallet rules. Wallet administrators have the authority to manage wallet details and approve changes. Wallet rules define how transactions within the wallet are approved.
Why atato Custody is Ideal for DAOs ?
atato Custody’s robust platform is uniquely positioned to meet the security and management needs of DAOs. Whether you’re looking for compliant and licensed custody for your digital asset service business, cost-effective solutions with unlimited wallet creations, or the flexibility to use custody with any tokens and networks, atato Custody has you covered.
As DAOs continue to redefine the landscape of digital governance and collaboration, atato Custody empowers you with the tools and security required to navigate this decentralised future.
To learn more about atato Custody and how it can seamlessly integrate with your DAO, book a demo today!