June 23, 2023
Loyalty

5 Frameworks for Brand Loyalty in Web3: Part 5

Decentralized autonomous organizations (DAOs) are decentralized networks that use smart contracts and blockchain technology to facilitate decision making and management without the need for a central authority...

5 Frameworks for Brand Loyalty in Web3: Part 5

Decentralized Business Decisions


Decentralized autonomous organizations (DAOs) are decentralized networks that use smart contracts and blockchain technology to facilitate decision making and management without the need for a central authority. They have been a large pillar in the web3 movement in recent years given their ability to equitably give people a voice in decision making processes for matters that are important to them. One of the key components of DAOs is the use of digital tokens to represent ownership and voting rights for decisions made within the DAO.

Since their proliferation, a growing number of brands have started using digital tokens in the form of NFTs to enable community involvement in various decision making processes. By owning an NFT from a brand's collection, individuals can have a say in how the brand operates, from deciding on product features to choosing charitable causes to support.

In this article, we will explore the benefits of using NFTs in DAOs for brands, discuss the potential challenges and considerations of DAOs, and provide examples of how brands can implement these practices within their organizations.

NFTs as Voting Rights

In the context of DAOs, NFTs are used to represent ownership and voting rights within the organization. It’s common for one NFT to represent one vote, so the more NFTs an individual owns, the greater their influence on decision making. This allows individuals to have a say in how the brand operates based on their level of ownership and monetary commitment to the brand. 

That being said, NFTs may be earned through involvement in the brand's community or by completing certain tasks. For example, a brand may offer NFTs as rewards to loyal customers or to individuals who contribute to the brand's growth in some way or are active participants in community conversations, meetings and voting. This ensures that active members of a community are rewarded and decisions can’t simply be made by those with buying power.


The Benefits of NFTs as Voting Tokens

One of the main advantages of using NFTs in this context is the increased transparency and accountability it brings. Because NFTs are stored on the blockchain and their ownership and voting rights are clearly recorded, it is easy to track and verify who is participating in decision making and how their votes are being cast. This helps to ensure that the process is fair and transparent, and that all stakeholders have an equal say.

Using NFTs in DAOs for brands can also allow companies to align their operations with the values and priorities of their communities. By giving customers the opportunity to vote on decisions related to the brand's operations, companies can ensure that they are meeting the needs and expectations of their users. It can also be a goldmine for data analysts in being able to understand what matters most to active members of a brand’s community. By better understanding the customer through what is theoretically a large scale focus group, brands can frequently garner power-consumer insights without investment into consumer research.

NFTs can also facilitate distributed decision making, giving individual stakeholders more influence in the process. Rather than having a small group of executives or shareholders making all the decisions, DAOs allow a larger group of individuals to have a say based on their level of ownership. This can lead to a more diverse range of perspectives and ideas being considered, potentially resulting in better outcomes for the brand.

Given that NFTs can be transferred and traded, it makes it easier for individuals to buy and sell their ownership and voting rights in the brand. This can allow for more fluid and dynamic participation in decision making.

Using NFTs in a DAO can also allow companies to provide value back to high value participants, such as those who consistently vote, show up to meetings, and are prominent figures within the organization. For example, a company might implement a rewards program for their most active and engaged NFT holders, offering additional NFTs or access to exclusive perks and benefits. These perks could include VIP access to product launches or special discounts. By recognizing and rewarding the most valuable members of their community, companies can increase customer engagement and loyalty.

Methods of Implementation

  • Product/Services

    DAOs can be used to gather feedback from a community of users on a product or service. Members can vote on proposed changes, such as different colorways, pricing or material sourcing, and the results can be used to guide development decisions.

  • Roadmap

    DAOs can be used to crowdsource ideas for new products or services from members, who can also vote on which ideas to pursue. Voting can also help in weighting the importance of various product/services features so brands can understand how to best prioritize to meet customer needs.
  • Grants

    Communities are often full of talent and great ideas. For brands that are able to assist in bringing these concepts to life, either monetarily or through other ways of support, creating grants that are funded by NFT sales are a brilliant way to give back to your community and drive brand advocacy. For example, if you’re a fashion label, you may have a group of driven independent designers within your community. By creating a grant fund and having the DAO vote on their favorite designers to award grants to, funds can be transparently and equitably distributed to participants based on community preference.


GORJS is NYX Cosmetics’ beauty DAO focused on fostering the development of the 3D artist community and its evolving approach to makeup in the metaverse. GORJS will serve as a launchpad for 3D creators from across the industry, with the intent to promote growth & innovation within the community, increased aptitude in digital makeup, and ultimately, success in the artists' career



  • Activations

    Brands may choose to do physical activations and events for either their community or the general public, and DAOs can be a great way to help NFT holders get the most out of their experience. Voting for event location, sponsors, or on-site guests can all be ways where consumers can be active participants in the way a brand outwardly presents itself.

  • Charitable Donations

    If a brand's community is particularly concerned about an issue or cause, DAOs are a wonderful way to fairly distribute funds to the right organizations. For example, if a brand’s mission is focused around environmental sustainability, the brand can use NFTs to allow customers to vote on decisions related to eco-friendly practices or charitable causes that support environmental causes. By using NFTs in this way, companies can demonstrate their commitment to the values and priorities of their communities and build trust and loyalty.

  • Fundraising

    If you are a business (either small or large) who is looking to bring to life a community driven concept and want to utilize the revenue generated from NFT sales to do so, creating a DAO for this is a great opportunity. Think of this like the Kickstarter model, yet when you invest in the company/project, you have a say in the product development process and roadmap.

  • Token-based incentives:

    DAOs can be used to create token-based incentives for members to participate in product development and decision-making. For example, members who contribute valuable feedback or ideas could be rewarded with tokens that can be used to purchase products or services at a discount.

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Stu Richards (aka Meta Mike) leads Partner Success at GigLabs and has a passion for contributing to the education and enablement of the open metaverse. Gigantik is an end-to-end web3 engagement platform and marketplace provider built for enterprise brands. It empowers marketing teams to own the experience of creating, selling, and distributing NFTs while enabling them to generate repeatable customer loyalty campaigns and activations using built-in utility tools. Gigantik provides a seamless end-user experience and onboarding using credit card and wallet integrations.

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