DAO (Decentralized Autonomous Organization) represents a major paradigm shift in human coordination. Bypassing corporate boardrooms, DAOs are coordinated via blockchain programs and token holder votes. We explain how DAOs work.

3 Core Characteristics of a DAO

1. Flat Governance

Lacks corporate executive directors. Direction is dictated by suggestions and votes submitted by holders of the DAO’s governance token.

2. Full Treasury Transparency

Financial reserves (treasury wallets) and voting data are publicly stored on-chain, rendering backroom deals impossible.

3. Open Contribution Models

No formal employment contracts. Talented contributors join globally, build codebase features, and receive bounties/salaries automatically.

Notable Real-World Use Cases

• Protocol Development: Setting swap fees or token allocations for DeFi platforms.
• Municipal Funding: Organizing crowdsourced programs for local city revitalization projects.