DAO

A blockchain-based organization governed by smart contracts and member voting, eliminating centralized control.

What is a Decentralized Autonomous Organization (DAO)?

A Decentralized Autonomous Organization (DAO) is a digital entity that operates on a blockchain, governed by predefined rules encoded in smart contracts. Unlike traditional organizations, DAOs have no central authority; instead, decision-making is driven by token holders who vote on proposals, with voting power typically proportional to the number of governance tokens held. This structure promotes transparency, as all rules, transactions, and decisions are recorded on the blockchain, accessible to all members. DAOs are used for various purposes, including managing decentralized finance (DeFi) protocols, funding projects, or governing community-driven initiatives.

In practice, a DAO’s operations are executed automatically by smart contracts, which enforce rules and execute decisions based on member votes. For example, Ethereum-based DAOs like MakerDAO manage stablecoin protocols, where token holders vote on parameters like interest rates or collateral types. The first notable DAO, “The DAO,” launched in 2016 on Ethereum, raised over $150 million in ETH but was compromised due to a code exploit, leading to a controversial Ethereum hard fork. Modern DAOs use frameworks like Aragon, DAOstack, or Snapshot to streamline governance, often integrating off-chain voting for efficiency while maintaining on-chain transparency.

DAOs face challenges like voter apathy, where low participation can skew decisions, and security risks from poorly audited smart contracts. Despite this, they represent a paradigm shift in organizational management, enabling global, trustless collaboration. As of 2025, thousands of DAOs exist, managing billions in digital assets, with examples like Uniswap’s DAO governing its decentralized exchange or Aave’s DAO overseeing