Understanding Tokens

Learn what tokens are, how they help fund the DAO, and how they help organize votes.

What are tokens?

You need to buy a DAOs token in order to become a member.

You can think of them like chips at a casino. If you want a seat at the DAO table, you need to buy its chips. Chips = tokens.

Token distribution serves two main purposes:

1. Funding the DAO and,

2. giving members the right to vote.

Tokens and funding

DAOs generate funding by selling their token in return for membership.

People interested in your DAO will purchase its native tokens because they want to become a member. Membership gives people partial ownership of the DAO and its assets. Also, the right to vote on decisions within the DAO.

Once there is enough funding for the DAO to kick-off, decisions will be made by its token holders through votes.

Tokens and voting

Tokens give members the right to vote because it symbolizes that they have contributed to the DAO and have stake in its success.

Having stake in the DAO means that everyone is inclined to vote in its best interest. However, some votes might be worth more than others. That is because there is not one token for each member.

Members can choose to purchase multiple tokens, one token, or as little as a fraction of a token to become a member.

While a fraction of a token is enough to join, there might be benefits to owning larger amounts. For example, the amount of tokens you own will sometimes determine the weight of your vote. The more tokens you have, the more weight your vote carries.

Powering the new ownership economy.

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