Decentralized Autonomous Organization (DAO)
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Published on September 16, 2025
What is a Decentralized Autonomous Organization (DAO)?
A Decentralized Autonomous Organization (DAO) is a community-led entity that operates autonomously through rules encoded on a blockchain. Members participate in decision-making through proposals and voting, usually using cryptocurrency tokens. DAOs aim to remove traditional hierarchical structures, fostering transparency and community governance. Examples include investment DAOs pooling funds for investments and grant DAOs distributing funds to projects.
Q&A
How does a DAO make decisions?
DAOs typically use token-weighted voting systems. Members who hold more tokens have a proportionally larger influence on the outcome of proposals. The specific rules for governance are defined in smart contracts, ensuring transparency and automation.
What are the advantages of a DAO?
Advantages include transparency (all transactions are recorded on the blockchain), increased community participation, and reduced reliance on centralized authorities. However, DAOs also present challenges in terms of security, scalability, and legal complexities.
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