DAO stands for Decentralized Autonomous Organization, which is a type of bottom-up entity structure with no central authority. Members of a DAO own tokens of the DAO, and they participate in the management and decision-making of the entity. DAOs are managed in whole or in part by decentralized computer programs, with voting and finances handled through a blockchain. They are member-owned communities without centralized leadership. The precise legal status of this type of business organization is unclear.
DAOs are used to make decisions in a bottom-up management approach. All votes and activity through the DAO are posted on a blockchain, making all actions of users publicly viewable. DAOs have built-in treasuries that no one has the authority to access without the approval of the group. Decisions are governed by proposals and voting to ensure everyone in the organization has a voice, and everything happens transparently on-chain.
DAOs are used to work with like-minded folks around the globe without trusting a benevolent leader to manage the funds or operations. They are used to make decisions in a bottom-up management approach. DAOs are used to fund larger companies, raise money for blockchain-based projects, or make decisions about investing in start-ups, managing a stablecoin, or buying a bunch of NFTs.
The governance of DAOs is subject to controversy, as these organizations have a lot of resources. DAOs must ensure security is prioritized, as they are vulnerable to hacking and other cyber attacks.
