IPFS: The New Dropbox for DAOs?
Decentralized Autonomous Organizations - are they clubs? Communities? Companies? Also known as a DAO, a Decentralized Autonomous Organization is an organized entity that has no central governing body ruling over it. The goal is to have members of the DAO work together to operate and make decisions in its best interest by distributing power across token-holders via votes, rather than by having an authoritative structure. One of the most compelling aspects of DAOs is that all votes and activities are posted on the blockchain, making the group’s every move publicly viewable. Transparency, autonomy, and security usually involve one thing - the blockchain - but IPFS creates a scalable way for DAOs to store larger volumes of public data that you wouldn’t normally be able to put onchain.
While all of a DAOs transactions are stored on the blockchain, the content associated with decisions made (proposals, discussions, diagrams, etc.) have historically been more centralized and less public. Well, at least they used to be… Enter IPFS!
The Original State of Operations
DAOs were created with endless use cases in mind, from charity organizations where members approve donations to crypto clubs where creatives and developers meet for networking and collaboration on projects. DAO operations take place through smart contracts. Rules established by the DAO are created; those holding a stake in the DAO receive voting rights. Proposals are then created and voted on. If a majority of stakeholders approve a proposal, as determined by the smart contract, it will pass and be implemented.
Making the Most of IPFS
DAOs can now improve the resilience of their data and assets by storing files on IPFS, as well as increase how accessible they are publicly. If votes are public, why can’t the artifacts leading to those decisions be public too? For DAOs looking to take advantage of both the blockchain and IPFS, the following provides a breakdown of how IPFS and the blockchain can be useful in the daily operations of a DAO. 👇
- Immutable Storage: This is where IPFS becomes invaluable. DAOs can utilize IPFS to store all immutable records because of the network’s content addressing nature. Each record will have a unique CID that allows it to be unchanged and verifiable, as well as accessible in a decentralized manner. When a DAO undergoes a voting process for a new proposal, it’s common to see the votes and the outcome publicly on the blockchain. What’s neat about storing everything on IPFS is that you’re essentially giving everyone a front-row seat into every step that got you there along the way!
- A Decentralized Structure: Using IPFS as its main functionality - a decentralized file storage network - DAOs can store documents, images, and metadata related to projects and proposals, which end up being distributed across various nodes.
- Integrating IPFS with Smart Contracts: A DAO can integrate IPFS with their smart contracts to store large amounts of content offchain. What makes this special is that the blockchain can still hold proofs of existence for these off-chain assets. This allows for maintaining the transparency of the DAO, while leaning into the scalability of IPFS for storage.
- Even More Security: The combination of using the blockchain and IPFS amps up your security and transparency. The blockchain keeps your content tamper-proof and IPFS decentralizes and ensures trustworthy content.
- Collaborative Uploading + Sharing: IPFS is collaborative in nature, and Pinata Workspaces makes editing and sharing content convenient for the entire DAO.
As you can see, the blockchain and IPFS are a seamless duo for DAOs. Over time, DAOs can upgrade smart contracts on the blockchain and update content on IPFS, allowing for continuous improvements and adjustments along the way.
IPFS - It’s a Team Sport
Many DAO members, with varying levels of responsibilities and governance, traditionally means a few things: password sharing, technical know-how, and a headache. Since Pinata has rolled out Workspaces, we’ve kept large organizations, such as DAOs, in mind by dramatically improving their IPFS workflow and capabilities. What used to be difficult and require a developer’s help is now just as easy as just inviting team members to your organization and collaborating on the content you all upload. The Pinata webapp, along with Workspaces, provides the flexibility and intuitive UI you need to make content storage as second nature as Dropbox.
As long as DAOs continue to gain new members, vote on new proposals, and want to store their data in a secure and transparent place for a very long time, working IPFS into the workflow is a strong idea to consider. Content storage doesn’t have to be tricky - start uploading to IPFS with your new Pinata Workspace. Happy Pinning!
January 31, 2024
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