Definition
A decentralized autonomous organization (DAO) uses a shared governance framework to coordinate a community or project. Smart contracts can manage voting, permissions or treasury assets, while members contribute decisions and work. The label describes an organizational approach rather than one universally standardized legal or technical structure.
How It Works
Members may submit proposals, delegate votes and approve spending or protocol changes. Some decisions execute through contracts after required votes and delays. Other DAOs rely on selected signers to carry out approved actions. Membership can be based on tokens, contributions or other eligibility rules.
Key Considerations
Autonomous does not mean that no people make decisions, and decentralized does not guarantee evenly distributed power. Token concentration, signer control, contract vulnerabilities and weak participation can undermine the intended process. Holding a DAO token also does not automatically establish corporate ownership or limited liability. The actual rules, permissions and applicable legal arrangements matter more than the name. A community vote should be distinguished from the transaction that ultimately moves treasury assets.