# Autonomous Organizations Autonomous Organizations make decisions and share assets bound by code. ## Definitions *Autonomous Organization (AO)* - An association of Wallets with Smart Contract Governance. *Blockchain* - A ledger for Wallets and Digital Assets run by Capture Resistant Nodes. *Capture Resistant* - The state of an association that implements Sufficiently Decentralized Governance. *Credibly Neutral* - The state of an association that is Capture Resistant to the extent it can host adverse interests. *Delegate* - An Operator subject to Governance. *Digital Asset* - A virtual balance controlled by a Wallet. *Governance* - The rules, rights and remedies of an association. *Member* - A Wallet that participates in the Governance of an AO without Substantial Control. *Multisig* - A multiplayer Wallet where transactions can be approved if a quorum threshold is reached (such as 3-of-5 Operator signatures.) *Node* - An account that participates in the Governance of a Blockchain. *Operator* - A Wallet that participates in the Governance of an AO with Substantial Control. *Smart Contract* - Software that updates Wallet permissions and handles Digital Assets based on its bytecode and the Blockchain that hosts it. *Substantial Control* - Sufficient control of an association where Governance is primarily determined by indentifiable interests. *Sufficiently Decentralized* - The state of an association not subject to Substantial Control. *Wallet* - A public key that that can execute Blockchain transactions through private key signatures. ## Centralized Autonomous Organization (CAO) CAOs have their Governance run by Operators. For example, a classic Multisig would qualify as a CAO because all decisions are made in an environment optimized for Substantial Control (centralized) rather than Capture Resistant operations. CAOs may just be a startup that uses a Blockchain to host its operations and raise investments in Digital Assets. CAOs may also be incorporated service providers or Delegates to a DAO, tasked with developing software, managing budgets and leading the DAO Governance process itself. ## Decentralized Autonomous Organization (DAO) DAOs have their Governance run by Members. They are optimized for Capture Resistant operations, selecting for Member distribution and Governance mechanisms that support Credibly Neutral projects, such as software protocol and public goods management. To this end, they tend to minimize legal and traditional organization templates. By design, DAOs are less efficient than CAOs because decision-making is typically more methodical in order to obtain Credibly Neutral outcomes, such as using voting periods and discussion forums to give Members more time to participate in a distributed manner. DAOs are therefore situated to scale to larger and more diverse stakeholder sets. ### Types of DAOs DAOs have been associated with distributed Investment (*The DAO*), Protocol development (*SushiSwap*), and Social scenes (*Milady*). #### Investment DAOs may offer interests to capital contributors who direct DAO capital through Governance. The goal in such DAOs is more explicitly around maximizing Digital Asset returns, deal flow, and social network effects. For example, The DAO offered Governance to the public to direct Digital Assets to select Blockchain projects. #### Protocol Smart Contract applications like Blockchain liquidity pools may have software updates and developer grants determined by Members who have their Governance interests represented by Digital Assets earned through using the protocol or contributing to its development. The value proposition of protocol DAO Membership is often situated around political control, but some DAOs also offer special rights or capital returns to DAO Members who lock up their Governance interests. For example, the Sushiswap protocol for exchanging Digital Assets was initially formed through distributing Governance to liquidity providers, and Members of the Sushiswap DAO are responsible for managing the protocol and developers. #### Social Chat rooms and other social spaces may be limited to holders of Digital Assets. The DAO in these circumstances is situated to provide member-management and the value proposition of such DAO is access to other Members. **Note:** *DAOs may exhibit a collection of the above projects, but start from an initial template. For example, Nouns DAO was a Social project (continuous NFT auction), that has evolved into an Investment and Protocol project, where the DAO is making grants into CAOs and other DAOs that add value to Nouns brand through marketing and software.* ### How are DAOs distributed? DAO Governance distribution commonly follows four patterns (i) Airdrop, (ii) Initial DEX Offering (IDO), (iii) Public Mint, and (iv) Private Mint. ### How is Member transferability handled? Members often join DAOs by exchanging Digital Assets for Governance, though some protocols have non-transferable interests to start, such as the Safe DAO distribution for Safe users.