Crypto glossary
DAO (decentralized autonomous organization)
A DAO, or decentralized autonomous organization, is a group that manages a shared treasury and makes decisions through smart contracts and token votes.
Members of a DAO usually hold governance tokens that give them voting power. Anyone meeting the required threshold can submit a proposal, such as changing a protocol fee, funding a grant or upgrading a contract, and token holders vote on it. Many DAOs vote off-chain on Snapshot to save fees and carry out approved decisions through a multisig or an on-chain governor contract.
Major DeFi protocols such as Uniswap, Aave, Sky (formerly MakerDAO) and Arbitrum are governed by DAOs that control large treasuries.
The first high-profile DAO, known simply as The DAO, was hacked in 2016, which led to the Ethereum hard fork that created Ethereum Classic. Common problems today are low voter turnout, power concentrated among a few large holders and uncertain legal status, although some jurisdictions, such as Wyoming, now offer dedicated legal structures.
Example
A Uniswap delegate with enough UNI voting power can propose switching on a protocol fee; if the vote passes, the governance contract executes the change after a time delay.
Related terms
Latest articles on DAO
- Binance Asks Arbitrum DAO to Release 8,426 ETH and 74.56M ARB
- ENS Seeks DAO Approval to Activate ENSv2 on Ethereum Mainnet
- PYTH Rallies Nearly 16% After Pyth DAO Ties Income to Token Purchases
- Aave Proposes Cayman Foundation to Secure Protocol IP for the DAO
- Sentora Targets Aave V4 With Proposal to Share Half of Market Revenue With DAO
