DAOs in Practice – From Multi-Sig to Voting (And Why Ownership Tokens exist)

Source: Dev.to

Overview

You just learned how DAOs work (Day 16). You know about voting, governance tokens, and treasury management. But here’s the uncomfortable truth: most people in crypto have never actually participated in a real DAO.

Today we’ll fix that. You’ll:

1. Set up a Multi‑Sig wallet – how DAOs actually control their money.
2. Cast a real governance vote – how DAOs actually make decisions.
3. Understand why the model is already evolving.

By the end of this exercise you won’t just understand DAOs—you’ll have proof that you’ve used them, and you’ll know what comes next.

Day 18 of my 60‑Day Web3 Journey. Yesterday (Day 17) I broke down stablecoins—the economic backbone that DAOs use.

Join the Community!

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Part 1 – The Multi‑Sig Wallet: How DAOs Protect Their Treasury

The Problem

DAOs need a way to spend funds that requires multiple people to approve each transaction, preventing any single actor from stealing the treasury.

The Solution

N‑of‑M approvals.
Example: a 3‑of‑5 multi‑sig means:

• 5 people hold keys.
• Any 3 of them must approve a transaction.
• No single person can move the funds alone.

The Practical Task: Setting Up Gnosis Safe on Sepolia

Step 0 – Create Your Burner Wallets

1. Open MetaMask (browser extension).
2. Click the account icon (top‑right).
3. Choose Create account → name it “Burner #1”.
4. Repeat → name the second one “Burner #2”.

You now have three accounts in MetaMask:

• Account 1 – your main wallet
• Burner #1
• Burner #2

Copy each address (click the address to copy).

Step 1 – Go to Safe

• Open the Gnosis Safe interface.
• Connect your main wallet (MetaMask).
• Select Sepolia Testnet from the network dropdown.

Step 2 – Create Your Safe

1. Click Create new Safe.
2. Name it “DAO Treasury (Test)”.
3. Confirm Sepolia is selected.
4. Click Create.

Step 3 – Add Owners

• Set threshold to 2‑of‑3 (2 out of 3 must approve).
• Review and confirm.

Step 4 – Fund Your Safe

1. After creation you’ll see a Safe address.
2. Switch to your main wallet in MetaMask.
3. Send 0.1 ETH (Sepolia testnet) to the Safe address.
4. Wait ~15 seconds for confirmation.

Step 5 – Execute a Multi‑Sig Transaction

1. In the Safe dashboard click New transaction.
2. Set Recipient to any address (e.g., your main wallet).
3. Amount: 0.01 ETH.
4. Click Create – the transaction is now pending.

Approvals

• Owner 1 (you): Click Approve.
• Owner 2: Switch MetaMask to Burner #1, return to Safe, find the pending transaction, and click Approve.

Once the threshold (2‑of‑3) is met, the transaction executes automatically.

What You’ve Learned

• How DAOs secure billions in assets.
• The difference between signing and executing.
• Why a single rogue actor can’t drain a DAO treasury.
• How permissions work in decentralized systems.

Part 2 – The Governance Vote: How DAOs Make Decisions

The Problem

The community makes decisions, but on‑chain voting can cost $50+ in gas fees.

The Solution

Most DAOs use Snapshot for discussion and Tally for final, binding decisions.

The Practical Task: Voting on Snapshot

1. Open the Snapshot interface.
2. Connect your main wallet (MetaMask).
3. Search for a DAO (e.g., Uniswap, Aave, Optimism).
   • Note: At the time of writing these three had no active proposals, so I selected Magic DAO.
4. Browse Active Proposals (status: Voting).
5. Click Vote, choose For / Against / Abstain, and submit (gasless!).
6. View the results to see how your vote compares to the community.

What You’ve Learned

• How governance actually happens on‑chain.
• The distinction between signal voting (Snapshot) and binding voting (Tally).
• Why large DAOs employ a multi‑step process: discussion → signal → execution.
• You are now officially part of a decentralized organization.

Part 3 – What’s Actually Broken: The Governance‑Token Problem

You just voted on Snapshot. Congratulations. But here’s the uncomfortable truth: ≈ 90 % of token holders never vote. They simply hold and speculate on price.

Why Most DAOs Aren’t Truly Decentralized

• Governance tokens give voting power without a financial incentive to use it.
• A small group of active voters (often whales) end up controlling decisions.

The Shift: From Pure Governance to Governance + Ownership

Examples of the Shift

• Curve (CRV) – started as pure governance, now adds yield‑farming rewards.
• Optimism (OP) – added revenue‑sharing for token holders.
• Arbitrum (ARB) – built with ownership economics from day one; votes affect returns.
• Uniswap (UNI) – moving toward protocol‑fee distribution to token holders.

The Real Future of DAOs

Governance tokens aren’t dead; they’re evolving. The future looks like tokens that align incentives: you vote because your vote directly impacts your financial returns, not just an abstract ideal of decentralization.

When incentives align, two things happen:

1. Higher participation – token holders are motivated to vote.
2. More effective governance – decisions reflect the interests of those financially invested in the protocol’s success.

Part 4 – Connecting the Dots – Why These Two Are Linked

The Real DAO Flow

Snapshot Vote → "Should the DAO send 10 ETH to fund the marketing team?"
Vote passes → 60 % in favor
Multi‑Sig owners execute → 2‑of‑3 approve the transaction
Treasury sends 10 ETH → Marketing team receives funds

• Without multi‑sigs: a single governance coordinator could take the vote results and send the money to their own wallet. Multi‑sigs prevent this.
• Without governance voting: a single person (the “DAO founder”) decides where all the money goes. Voting prevents this.
• Without ownership incentives baked into the token: most people won’t bother voting at all. Aligned incentives change that.

Together, these mechanisms create the checks and balances that make DAOs truly decentralized.

My Learning Journey

I always wondered: “How do communities actually vote on decisions?”

That’s powerful. But I realized something else: Most DAOs today are just “governance theater.” The voting exists, but most people don’t participate.

The exciting part? The space is evolving. Projects are moving from “governance tokens” to “ownership tokens”—where your vote actually affects your financial returns. That changes everything.

That’s the future. And now I’ve actually participated in both models.

Resources to Go Deeper

• Safe Docs – How to manage multi‑sigs across chains
• Snapshot Docs – Building governance into your DAO
• Tally Governance – On‑chain voting with binding execution
• The Future of Tokenomics – How token design actually matters (Day 12 revisited)