DAOs

A decentralized autonomous organization (DAO) is an organization governed by rules encoded as smart contracts on a blockchain. DAOs typically rely on token holders to propose and vote on policy decisions, with the execution of approved decisions carried out automatically by software or by designated agents. This structure aims to align incentives and provide transparent, auditable governance.

Governance mechanics usually involve proposals, voting, and treasury management. Proposals may allocate funds, change governance rules, or upgrade software. Voting is often token-weighted, though some schemes use quadratic voting or off-chain signaling with on-chain execution. Some DAOs use off-chain voting via Snapshot to save gas, while on-chain execution enforces decisions.

The concept gained prominence with The DAO, a 2016 Ethereum project that raised substantial funds but was hacked, prompting a controversial hard fork. Since then, DAO technology has matured with platforms such as Aragon, MolochDAO, and DAOstack that provide templates to create and manage on-chain organizations.

DAOs operate on various blockchains, most commonly Ethereum. They often hold a shared treasury controlled by the governing contract and subject to member votes. Legal recognition varies; some jurisdictions have created forms such as a DAO LLC to provide liability protections and property rights.

Applications range from decentralized finance governance to grant-making and venture coordination. Notable examples include MakerDAO, which governs the DAI stablecoin, and Uniswap governance, which manages protocol upgrades and token economics. Still, DAOs face challenges such as security risks, governance capture, voter participation, and regulatory uncertainty.