What is a DAO?
A DAO is an organisation where rules are encoded in smart contracts and decisions are made by token holder votes. There is no CEO, no board, no headquarters — just code and community.
How DAOs differ from traditional organisations
| Feature | Traditional Org | DAO |
|---|---|---|
| Decision making | Management hierarchy | Token holder votes |
| Rules | Legal documents | Smart contracts |
| Transparency | Limited | Fully on-chain |
| Membership | Employment/shareholding | Token ownership |
| Geography | Jurisdiction-bound | Global |
DAO treasury
Many DAOs hold a treasury — funds accumulated from protocol fees or token sales. Treasury spending is governed by token holder votes. This creates a community-owned financial resource.
Famous DAOs
- Uniswap DAO — governs the Uniswap protocol
- MakerDAO — governs the DAI stablecoin
- Compound DAO — governs the Compound lending protocol
- Nouns DAO — NFT-based DAO with daily auctions
DAO limitations
DAOs are still evolving. Legal recognition is limited in most jurisdictions. Governance participation is often low. Smart contract bugs can affect governance execution. But the model represents a fundamental shift in how organisations can operate.