Questions » What is a DAO?

What is a DAO?

A DAO, or decentralized autonomous organization, is a type of organization that is run through rules encoded as computer programs on a blockchain. DAOs are designed to be decentralized and autonomous, meaning that they operate without a central authority or management and are governed by the rules encoded in their smart contracts.

DAOs can be used for a variety of purposes, such as managing decentralized funds, making collective decisions, or operating decentralized applications. They typically operate through a token-based voting system, where token holders can vote on proposals or changes to the DAO’s rules and governance structure.

DAOs are different from traditional organizations in that they are not owned or controlled by any individual or entity, but instead are governed by their decentralized community of stakeholders. This means that decision-making in a DAO is more transparent and democratic than in traditional organizations.

DAOs have gained popularity in the cryptocurrency space as a way to create decentralized communities and organizations. However, there have also been concerns about the potential for manipulation or exploitation of DAOs through malicious actors or bugs in their smart contracts, as demonstrated by the 2016 DAO hack, which resulted in the theft of millions of dollars worth of Ether.