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Decentralized Autonomous Organizations

Definition​

A decentralized autonomous organization (DAO) is a digital form of human cooperation manage operations or achieve objectives primarily using code rather than people.

Discussion​

Overview​

In the context of DAOs:

  • decentralized means there is no one authority such as an executive team or board of directors
  • autonomous refers to rules written by code to run without further input from humans, smart contracts being one use case.

Most countries have laws controlling how groups of individuals may collect and use money. National governments mostly require people to register or nominate a dedicated entity with the government for this purpose and then appoint individuals to make key decisions about the money and manage operations to implement those decisions.

In contrast, a DAO does not typically depend on a nation's regulatory frameworks but, rather, individuals rely on code to handle everyone's money. The way this is done is by the code following certain rules voluntarily accepted by the people giving money and issuing digital tokens to those people. The tokens may be used to vote on new rules on how the money is used, thus increasing the democratization of finance to a greater degree than is possible under national government models.

DAOs and governance​

Due to their inherent voluntary nature, DAOs offer an alternative to traditional financial and governance institutions. Their structure allows individuals to choose to opt-in to a set of rules rather than being subject to rules they cannot opt out of.

DAOs are a ground-up governance model — operating outside public governments and political institutions through network-based structures. They give people with shared values avenues to work towards common causes.

DAOs are well-suited to free cities and special economic zones due to their non-reliance on national governments and their potential for transparent, consent-based governance.