DAO
A DAO is an organisation whose rules are written in smart contracts and whose members vote on decisions using tokens.
Explained simply
Instead of a board and articles of association there is program code and voting. Anyone holding governance tokens may submit proposals and vote: on use of the treasury, changes to the protocol or new partnerships.
Adopted resolutions are often executed automatically because the treasury itself is a smart contract. Many DeFi protocols are governed this way.
Legally, DAOs are not yet clearly classified in most countries. In practice voting power is often concentrated among a few large token holders.
From the familiar world
A cooperative whose general meeting is permanently in session online and whose resolutions execute themselves. One share, one vote, except the share is a token.
An example
The DAO behind a major lending protocol manages a treasury in the hundreds of millions. Thousands of token holders vote publicly on how it is used.
Why it matters
DAOs show what corporate governance without a central authority can look like. For context: the idea is strong, practice often still immature, and legally you are in a grey area.
To pass on
„A DAO is a cooperative whose articles are program code and whose members vote with tokens.“
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