What is a DAO?

May 20, 2021 1 min read
What is a DAO?
This article is part of a curated learning journey on DAOs and Governance.

A DAO, or a Decentralised Autonomous Organisation, is a novel way for communities to come together to create and share value online.

The concept of a DAO is rooted in the same principles that underlie blockchain technology and cryptocurrency themselves; decentralisation and democracy. The organisation itself, ideally, works on rules that are transparently encoded on-chain as opposed to being controlled by a central power — such as a single developer, a corporation or a government.

DAOs have been created for all sorts of endeavours, from purely DeFi purposes such as lending or trading, to more idealistic pursuits such as governing underlying blockchains, education, or funding public goods (e.g. Gitcoin).

Some projects are launched as a fully-fledged DAO from the get-go, with changes to smart contracts only being possible via automated on-chain governance. Other projects begin as a small core team and, as they mature, work to incorporate decentralised governance practices, such as launching a governance token.

As DAOs grow, they tend to encourage members of their community to get involved with the running of the project. This may be on the technical side by joining the dev team, as a community manager who helps to organise governance discussions, or as UX designer, translator, etc.

Stake DAO itself is a great example, where the initial efforts were the result of a core contributors’ group, yet the major decisions for the protocol are decided by its community. In terms of ongoing and further development, DAO members are free to participate and make new contributions.

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