DAOs explained

DAO stands for “Decentralized Autonomous Organization” which is a way of community governance on the blockchain. Given the decentralized nature of the blockchain, DAOs ensure that a collective of a community’s members hold the power to make decisions.

DAOs rely on voting to make decisions. Members of the community hold “governance tokens” which give them the chance to vote. Once there is a new proposal (like how funds should be used on a certain project), holders of these tokens use them to vote on the blockchain.

There are many uses of DAOs, primarily to decide on funding, managing shared treasuries, changes to a project, etc. DAOs are a part of the larger transparent and decentralized nature of blockchain, where decisions are open and public.

The success of DAOs depends on active participation and strong security. Although DAOs are still in their experimental stage, they paint a picture of a future that does not rely on banks and institutions.