DAO stands for Decentralized Autonomous Organization. It's an organization using blockchain and smart contracts as a coordination mecanism.
The idea is to remove centralized leadership of a project/group and make it member-owned by replacing traditional organisation infrastructure with on-chain and open-sources rules defined inside smart contracts.
Because anonymity is important in crypto, DAOs also allows you to reduce trust assumption when working with strangers by defining shared rules between all DAO members, you only need an address !
It's an effective and safe way to work with like-minded folks around the globe.
DAO | Trad org |
---|---|
Usually flat, and fully democratized. | Usually hierarchical. |
Voting required by members for any changes to be implemented. | Depending on structure, changes can be demanded from a sole party, or voting may be offered. |
Votes tallied, and outcome implemented automatically without trusted intermediary. | If voting allowed, votes are tallied internally, and outcome of voting must be handled manually. |
Services offered are handled automatically in a decentralized manner (for example distribution of philanthropic funds). | Requires human handling, or centrally controlled automation, prone to manipulation. |
All activity is transparent and fully public. | Activity is typically private, and limited to the public. |
You can learn more about DAOs on Ethereum.org website.