Maybe you'll work for a DAO next! Over $1 Billion in NFTs in the Flamingo DAO Another DAO tried to buy the NFL team Denver Broncos. The UkraineDAO raised over $7 Million for Ukraine. The PleasrDAO paid $4m for a Wu-Tang Clan album that belonged to the “pharma bro.”
DAOs move billions and employ thousands. So learn what a DAO is, how it works, and how to create one!

DAO? So, what? Why is it better?

A Decentralized Autonomous Organization (DAO). Some people like to also refer to it as Digital Autonomous Organization, but I prefer the former.
They are virtual organizations. In the real world, you have organizations or companies right? These firms have shareholders and a board. Usually, anyone with authority makes decisions. It could be the CEO, the Board, or the HIPPO. If you own stock in that company, you may also be able to influence decisions. It's now possible to do something similar but much better and more equitable in the cryptocurrency world.

This article informs you:

DAOs- What are the most common DAOs, their advantages and disadvantages over traditional companies? What are they if any?
Is a DAO legally recognized?
How secure is a DAO?
I’m ready whenever you are!

A DAO is a type of company that is operated by smart contracts on the blockchain. Smart contracts are computer code that self-executes our commands. Those contracts can be any. Most second-generation blockchains support smart contracts. Examples are Ethereum, Solana, Polygon, Binance Smart Chain, EOS, etc. I think I've gone off topic. Back on track.   Now let's go!
Unlike traditional corporations, DAOs are governed by smart contracts. Unlike traditional company governance, DAO governance is fully transparent and auditable. That's one of the things that sets it apart. The clarity!
A DAO, like a traditional company, has one major difference. In other words, it is decentralized. DAOs are more ‘democratic' than traditional companies because anyone can vote on decisions. Anyone! In a DAO, we (you and I) make the decisions, not the top-shots. We are the CEO and investors. A DAO gives its community members power. We get to decide.
As long as you are a stakeholder, i.e. own a portion of the DAO tokens, you can participate in the DAO. Tokens are open to all. It's just a matter of exchanging it. Ownership of DAO tokens entitles you to exclusive benefits such as governance, voting, and so on. You can vote for a move, a plan, or the DAO's next investment. You can even pitch for funding. Any ‘big' decision in a DAO requires a vote from all stakeholders. In this case, ‘token-holders'! In other words, they function like stock.

What are the 5 DAO types?

Different DAOs exist. We will categorize decentralized autonomous organizations based on their mode of operation, structure, and even technology. Here are a few. You've probably heard of them:

1. DeFi DAO

These DAOs offer DeFi (decentralized financial) services via smart contract protocols. They use tokens to vote protocol and financial changes. Uniswap, Aave, Maker DAO, and Olympus DAO are some examples. Most DAOs manage billions.

Maker DAO was one of the first protocols ever created. It is a decentralized organization on the Ethereum blockchain that allows cryptocurrency lending and borrowing without a middleman.
Maker DAO issues DAI, a stable coin. DAI is a top-rated USD-pegged stable coin.
Maker DAO has an MKR token. These token holders are in charge of adjusting the Dai stable coin policy. Simply put, MKR tokens represent DAO “shares”.

2. Investment DAO

Investors pool their funds and make investment decisions. Investing in new businesses or art is one example. Investment DAOs help DeFi operations pool capital. The Meta Cartel DAO is a community of people who want to invest in new projects built on the Ethereum blockchain. Instead of investing one by one, they want to pool their resources and share ideas on how to make better financial decisions.

Other investment DAOs include the LAO and Friends with Benefits.

3. DAO Grant/Launchpad

In a grant DAO, community members contribute funds to a grant pool and vote on how to allocate and distribute them. These DAOs fund new DeFi projects. Those in need only need to apply. The Moloch DAO is a great Grant DAO. The tokens are used to allocate capital. Also see Gitcoin and Seedify.

4. DAO Collector

I debated whether to put it under ‘Investment DAO' or leave it alone. It's a subset of investment DAOs. This group buys non-fungible tokens, artwork, and collectibles. The market for NFTs has recently exploded, and it's time to investigate. The Pleasr DAO is a collector DAO. One copy of Wu-Tang Clan's "Once Upon a Time in Shaolin" cost the Pleasr DAO $4 million. Pleasr DAO is known for buying Doge meme NFT. Collector DAOs include the Flamingo, Mutant Cats DAO, and Constitution DAOs. Don't underestimate their websites' "childish" style. They have millions.

5. Social DAO

These are social networking and interaction platforms. For example, Decentraland DAO and Friends With Benefits DAO.

What are the DAO Benefits?

Here are some of the benefits of a decentralized autonomous organization:

• They are trustless. You don’t need to trust a CEO or management team
• It can’t be shut down unless a majority of the token holders agree. The government can't shut - It down because it isn't centralized.
• It's fully democratic
• It is open-source and fully transparent.

What about DAO drawbacks?

We've been saying DAOs are the bomb? But are they really the shit? What could go wrong with DAO?
DAOs may contain bugs. If they are hacked, the results can be catastrophic.
No trade secrets exist. Because the smart contract is transparent and coded on the blockchain, it can be copied. It may be used by another organization without credit. Maybe DAOs should use Secret, Oasis, or Horizen blockchain networks.

Are DAOs legally recognized??

In most counties, DAO regulation is inexistent. It's unclear. Most DAOs don’t have a legal personality. The Howey Test and the Securities Act of 1933 determine whether DAO tokens are securities. Although most countries follow the US, this is only considered for the US. Wyoming became the first state to recognize DAOs as legal entities in July 2021 after passing a DAO bill. DAOs registered in Wyoming are thus legally recognized as business entities in the US and thus receive the same legal protections as a Limited Liability Company.

In terms of cyber-security, how secure is a DAO?

Blockchains are secure. However, smart contracts may have security flaws or bugs. This can be avoided by third-party smart contract reviews, testing, and auditing

Finally, Decentralized Autonomous Organizations are timeless. Let us examine the current situation: Ukraine's invasion. A DAO was formed to help Ukrainian troops fighting the Russians. It was named Ukraine DAO. Pleasr DAO, NFT studio Trippy Labs, and Russian art collective Pussy Riot organized this fundraiser. Coindesk reports that over $3 million has been raised in Ethereum-based tokens. AidForUkraine, a DAO aimed at supporting Ukraine's defense efforts, has launched. Accepting Solana token donations. They are fully transparent, uncensorable, and can’t be shut down or sanctioned.
DAOs are undeniably the future of blockchain. Everyone is paying attention. Personally, I believe traditional companies will soon have to choose between adapting or being left behind.

That is, how to snipe all the rares without using ERC721R!

Introduction: Blessed and Lucky 

Mphers was the first mfers derivative, and as a Phunks derivative, I wanted one.

I wanted an alien. And there are only 8 in the 6,969 collection. I got one!

In case it wasn't clear from the tweet, I meant that I was lucky to have figured out how to 100% guarantee I'd get an alien without any extra luck.
Read on to find out how I did it, how you can too, and how developers can avoid it!
How to make rare NFTs without luck.

# How to mint rare NFTs without needing luck

For example, once I knew my alien was #4002, I simply refreshed the mint page until #3992 was minted, and then mint 10 mphers.

How did I know #4002 was extraterrestrial? Let's go back.

First, go to the mpher contract's Etherscan page and look up the tokenURI of a previously issued token, token #1:

As you can see, mphers creates metadata URIs by combining the token id and an IPFS hash.

This method gives you the collection's provenance in every URI, and while that URI can be changed, it affects everyone and is public.

Consider a token URI without a provenance hash, like https://mphers.art/api?tokenId=1.
As a collector, you couldn't be sure the devs weren't changing #1's metadata at will.
The API allows you to specify “if #4002 has not been minted, do not show any information about it”, whereas IPFS does not allow this.

It's possible to look up the metadata of any token, whether or not it's been minted.
Simply replace the trailing “1” with your desired id.

Mpher #4002

These files contain all the information about the mpher with the specified id. For my alien, we simply search all metadata files for the string “alien mpher.”

Take a look at the 6,969 meta-data files I'm using OpenSea's IPFS gateway, but you could use ipfs.io or something else.

Use curl to download ten files at once. Downloading thousands of files quickly can lead to duplicates or errors. But with a little tweaking, you should be able to get everything (and dupes are fine for our purposes).
Now that you have everything in one place, grep for aliens:

The numbers are the file names that contain “alien mpher” and thus the aliens' ids.
The entire process takes under ten minutes. This technique works on many NFTs currently minting.

In practice, manually minting at the right time to get the alien is difficult, especially when tokens mint quickly. Then write a bot to poll totalSupply() every second and submit the mint transaction at the exact right time.

You could even look for the token you need in the mempool before it is minted, and get your mint into the same block!

However, in my experience, the “big” approach wins 95% of the time—but not 100%.
“Am I being set up all along?”

Is a question you might ask yourself if you're new to this.
It's disheartening to think you had no chance of minting anything that someone else wanted.
But, did you have no opportunity? You had an equal chance as everyone else!
Take me, for instance: I figured this out using open-source tools and free public information. Anyone can do this, and not understanding how a contract works before minting will lead to much worse issues.

The mpher mint was fair.

While a fair game, “snipe the alien” may not have been everyone's cup of tea.
People may have had more fun playing the “mint lottery” where tokens were distributed at random and no one could gain an advantage over someone simply clicking the “mint” button.

How might we proceed?
Minting For Fashion Hats Punks, I wanted to create a random minting experience without sacrificing fairness. In my opinion, a predictable mint beats an unfair one. Above all, participants must be equal.

Sadly, the most common method of creating a random experience—the post-mint “reveal”—is deeply unfair. It works as follows:

• During the mint, token metadata is unavailable. Instead, tokenURI() returns a blank JSON file for each id.
• An IPFS hash is updated once all tokens are minted.
• You can't tell how the contract owner chose which token ids got which metadata, so it appears random.

Because they alone decide who gets what, the person setting the metadata clearly has a huge unfair advantage over the people minting. Unlike the mpher mint, you have no chance of winning here.
But what if it's a well-known, trusted, doxxed dev team? Are reveals okay here?
No! No one should be trusted with such power. Even if someone isn't consciously trying to cheat, they have unconscious biases. They might also make a mistake and not realize it until it's too late, for example.

You should also not trust yourself. Imagine doing a reveal, thinking you did it correctly (nothing is 100%! ), and getting the rarest NFT. Isn't that a tad odd Do you think you deserve it? An NFT developer like myself would hate to be in this situation.

Reveals are bad*

UNLESS they are done without trust, meaning everyone can verify their fairness without relying on the developers (which you should never do).
An on-chain reveal powered by randomness that is verifiably outside of anyone's control is the most common way to achieve a trustless reveal (e.g., through Chainlink).

Tubby Cats did an excellent job on this reveal, and I highly recommend their contract and launch reflections. Their reveal was also cool because it was progressive—you didn't have to wait until the end of the mint to find out.

In his post-launch reflections, @DefiLlama stated that he made the contract as trustless as possible, removing as much trust as possible from the team.

And @DefiLlama is a superstar developer. Imagine how much stress maximizing trustlessness will cause you!

That leaves me with a bad solution that works in 99 percent of cases and is much easier to implement: random token assignments.

Introducing ERC721R: A fully compliant IERC721 implementation that picks token ids at random.

ERC721R implements the opposite of a reveal: we mint token ids randomly and assign metadata deterministically.
This allows us to reveal all metadata prior to minting while reducing snipe chances.
Then import the contract and use this code:

What is ERC721R and how does it work

First, a disclaimer: ERC721R isn't truly random. In this sense, it creates the same “game” as the mpher situation, where minters compete to exploit the mint. However, ERC721R is a much more difficult game.
To game ERC721R, you need to be able to predict a hash value using these inputs:

This is impossible for a normal person because it requires knowledge of the block timestamp of your mint, which you do not have.

To do this, a miner must set the timestamp to a value in the future, and whatever they do is dependent on the previous block's hash, which expires in about ten seconds when the next block is mined.

This pseudo-randomness is “good enough,” but if big money is involved, it will be gamed. Of course, the system it replaces—predictable minting—can be manipulated.
The token id is chosen in a clever implementation of the Fisher–Yates shuffle algorithm that I copied from CryptoPhunksV2.

Consider first the naive solution: (a 10,000 item collection is assumed):

1. Make an array with 0–9999.
2. To create a token, pick a random item from the array and use that as the token's id.
3. Remove that value from the array and shorten it by one so that every index corresponds to an available token id.

This works, but it uses too much gas because changing an array's length and storing a large array of non-zero values is expensive.

How do we avoid them both? What if we started with a cheap 10,000-zero array? Let's assign an id to each index in that array.

Assume we pick index #6500 at random—#6500 is our token id, and we replace the 0 with a 1.

But what if we chose #6500 again? A 1 would indicate #6500 was taken, but then what? We can't just "roll again" because gas will be unpredictable and high, especially later mints.

This allows us to pick a token id 100% of the time without having to keep a separate list. Here's how it works:

1. Make a 10,000 0 array.
2. Create a 10,000 uint numAvailableTokens.
3. Pick a number between 0 and numAvailableTokens. -1
4. Think of #6500—look at index #6500. If it's 0, the next token id is #6500. If not, the value at index #6500 is your next token id (weird!)
5. Examine the array's last value, numAvailableTokens — 1. If it's 0, move the value at #6500 to the end of the array (#9999 if it's the first token). If the array's last value is not zero, update index #6500 to store it.
6. numAvailableTokens is decreased by 1.
7. Repeat 3–6 for the next token id.

So there you go! The array stays the same size, but we can choose an available id reliably. The Solidity code is as follows:

GitHub url

Unfortunately, this algorithm uses more gas than the leading sequential mint solution, ERC721A.

This is most noticeable when minting multiple tokens in one transaction—a 10 token mint on ERC721R costs 5x more than on ERC721A. That said, ERC721A has been optimized much further than ERC721R so there is probably room for improvement.

Conclusion

Listed below are your options:

• ERC721A: Minters pay lower gas but must spend time and energy devising and executing a competitive minting strategy or be comfortable with worse minting results.
• ERC721R: Higher gas, but the easy minting strategy of just clicking the button is optimal in all but the most extreme cases. If miners game ERC721R it’s the worst of both worlds: higher gas and a ton of work to compete.
• ERC721A + standard reveal: Low gas, but not verifiably fair. Please do not do this!
• ERC721A + trustless reveal: The best solution if done correctly, highly-challenging for dev, potential for difficult-to-correct errors.

Did I miss something? Comment or tweet me @dumbnamenumbers.
Check out the code on GitHub to learn more! Pull requests are welcome—I'm sure I've missed many gas-saving opportunities.

Thanks!

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