A decentralized autonomous organization is a community-run group that works without a traditional boss or board. Rules live in code, and the community follows those rules to run projects and make decisions. Power is spread across members rather than concentrated in one place.
DAOs run on blockchains using smart contracts. These contracts set the playbook for what the organization can do and when it can do it. Because the logic is on-chain, the community can operate without a central authority and still keep things consistent.
The smart contract defines the rules, like who can propose changes and how votes get counted. Members create proposals, vote, and if a vote passes, the resulting action can be executed automatically on-chain. Everything is visible on the blockchain, which makes the process auditable by anyone.
Many DAOs use governance tokens. Holding more of these tokens usually means your vote carries more weight, so someone with a larger stake has a stronger say in proposals. Tokens also let members suggest ideas, not just vote on them.
Common uses include community treasuries, funding proposals, and collective decisions about products or investments. Some DAOs raise funds, issue tokens, and run on-chain voting systems to steer projects. Others coordinate pooled donations or public-goods efforts.
Because the rules are code, decisions can be automated and less dependent on manual approval. Members can join from anywhere, and on-chain activity creates a clear record of what happened and why. The setup aims for transparency and shared control rather than hierarchy.
DAOs still face real-world challenges. Smart contracts can have bugs, and once deployed, errors are hard to fix. Legal treatment is still evolving in many places, which can make operations tricky. Communities also need to think about voter participation and avoiding power concentrating with a few large holders.
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