LeoGlossary: Decentralized Autonomous Organization (DAO)

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A digitally-native business that is built on the Internet. It is truly decentralized without traditional management structure. There is also an autonomous governance system in place.

Membership in a DAO comes from the ownership of the token. This typically gives people voting rights according to what is laid out in the code. Unlike corporations where executives make all the decisions, a DAO is hyper-democratic in nature. The members are able to control what takes place via direct voting.

Since technology allows for up-to-the-moment tabulations, DAO governance is highly organic. Votes, in most instances, can be changed at anytime.

Smart contracts play a vital role in DAOs since that is what directs the organization.

While mostly in the digital realm, DAOs do afford the opportunity to hire people as needed. There are times when services to the DAO are required and, like most business, experts are brought on.

Since DAOs are tied to blockchains they tend to carry with them greater transparency as opposed to other business structures. Also, members can enter or exit as they see fit since it only requires the buying or selling of the token.

Finally, all transactions take place on-chain, meaning it is located on an immutable ledger.


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