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What's a DAO?

A DAO (Decentralized Autonomous Organization) is one of the major features of digital currencies is that they are decentralized.

They are not controlled by a single institution like a government or central bank, but instead are divided among a variety of computers, networks, and nodes.

A DAO's financial transaction record and program rules are maintained on a blockchain.

Anyone who purchases and holds these tokens gains the ability to vote on important matters directly related to the DAO. They typically use smart contracts in place of traditional corporate structures to coordinate the efforts and resources of many towards common aims. These are self-executing computer programs that carry out a particular function when certain conditions are met.

Some proposed characteristics of a DAO include:

  • No hierarchy: There's often no hierarchical management. Stakeholders usually make decisions instead of leaders or managers.

  • Transparent: The code is open source, meaning anyone can look at it. On the blockchain, anyone can scan through the history to see how decisions were made.

  • Open access: Anyone with internet access could hold DAO tokens or buy them, thus giving them decision-making power in the DAO.

  • Democratic changes: Investors can change the rules of a DAO by voting on new proposals.

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