Decentralized Autonomous Organization (DAO)
A Decentralized Autonomous Organization (DAO) is an organization that is run through Smart Contracts on a Blockchain, enabling it to operate without a central authority. DAOs use distributed ledger technology to facilitate decisions and transactions among its members through consensus mechanisms. Members typically hold tokens that grant them voting rights, allowing them to propose and vote on changes or actions within the organization. This structure promotes transparency, efficiency, and a level of democratization in governance.
Examples of DAOs include:
- MakerDAO: A decentralized lending platform that allows users to generate the DAI stablecoin by locking up Collateral.
- Uniswap: A decentralized exchange that allows users to trade cryptocurrencies and governs its protocol through token holder voting.
- Aragon: A platform that enables users to create and manage DAOs, facilitating governance and fundraising.
In practice, DAOs have been used for various purposes, such as:
- Collective investment funds, where members pool resources and vote on investment decisions.
- Charitable organizations that allow token holders to propose and vote on donation allocations.
- Social clubs that organize events and activities based on member preferences and votes.