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What is a DAO?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 5 min
In short
A DAO runs decisions and treasury execution through smart contracts and token voting. It is transparent, but voting power concentrates and its legal status is unsettled.
Key points
- Proposals and votes are recorded on-chain
- Treasury execution is automated by contract
- Voting power tends to concentrate
Definition
A Decentralized Autonomous Organization: an entity governed by token-holder votes.
Proposal, debate, vote and execution are all public, so outsiders can follow how a decision was made. Typical topics are fee changes and treasury allocation.
But influence follows token holdings, so decisions can effectively rest with a few holders. Check the distribution of voting power before joining.
Watch out for
- · Their legal status in Japan is not settled