What is a DAO? Decentralized Autonomous Organizations

In this tutorial, you'll learn about What is a DAO? Decentralized Autonomous Organizations. We cover key concepts, practical examples, and best practices to help you understand and apply this topic effectively.

What You'll Learn

Understand how DAOs work — decentralized organizations governed by token holders through on-chain voting, with transparent treasuries and no central management.

Why It Matters

DAOs reinvent how people coordinate and make decisions. They enable global, permissionless collaboration without traditional corporate hierarchy.

Real-World Use

Managing a DeFi protocol (Uniswap DAO), funding public goods (Gitcoin), operating a decentralized VC (MetaCartel), or managing a community treasury.

What is a DAO?

A DAO (Decentralized Autonomous Organization) is an organization run by code and token holder votes instead of executives and board meetings.

Traditional Company              DAO
┌────────────────────┐       ┌──────────────────────┐
│ CEO               │       │ Smart contracts      │
│  ↓                │       │  ↓                   │
│ Board of directors│       │ Token holders vote   │
│  ↓                │       │  ↓                   │
│ Management        │       │ Proposals executed   │
│  ↓                │       │   automatically      │
│ Employees         │       │ └─ by code           │
└────────────────────┘       └──────────────────────┘

How a DAO Works

1. Someone creates a proposal (e.g., "Spend 10 ETH on marketing")
         ↓
2. Token holders vote during the voting period
         ↓
3. If proposal passes (quorum + majority), it's queued
         ↓
4. After timelock, anyone can execute it on-chain
         ↓
5. Treasury sends 10 ETH to the marketing wallet

A Simple DAO Contract

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.0;

contract SimpleDAO {
    struct Proposal {
        string description;
        address recipient;
        uint256 amount;
        uint256 votesFor;
        uint256 votesAgainst;
        bool executed;
    }

    mapping(address => uint256) public shares;  // Voting power
    Proposal[] public proposals;
    mapping(uint256 => mapping(address => bool)) public voted;

    function createProposal(string memory desc,
        address rec, uint256 amount) public {
        proposals.push(Proposal(desc, rec, amount, 0, 0, false));
    }

    function vote(uint256 proposalId, bool support) public {
        require(shares[msg.sender] > 0, "No voting power");
        require(!voted[proposalId][msg.sender], "Already voted");
        voted[proposalId][msg.sender] = true;

        if (support) {
            proposals[proposalId].votesFor += shares[msg.sender];
        } else {
            proposals[proposalId].votesAgainst += shares[msg.sender];
        }
    }

    function execute(uint256 proposalId) public {
        Proposal storage p = proposals[proposalId];
        require(!p.executed, "Already executed");
        require(p.votesFor > p.votesAgainst, "Not passed");
        p.executed = true;
        payable(p.recipient).transfer(p.amount);
    }
}

Governance Tokens

DAOs use governance tokens for voting power:

1 token = 1 vote. Or sometimes quadratic voting or delegation.

Key DAO Tools

Risks