What is a DAO?

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By: Yash, Zeneca

A DAO, or Decentralized Autonomous Organization, is a new type of organization or group that runs on blockchain technology. It’s like a virtual club or company where members can make decisions together without a central authority, like a boss or president, in charge.

How traditional companies work

Traditional companies unleash innovation by making it possible for people to come together and contribute talent & capital to achieve a common goal.

Today, LLCs are the go-to option to start a new company. LLCs have completely changed the world, but it’s time to take it one step further. Most companies are:

  • Hierarchical: A few people set the company vision and plan at the top.
  • Restricted: Employees must follow orders – not much room for creativity.
  • Exclusive: Must be hired to contribute in a meaningful way.

How are DAOs different?

A DAOs main purpose is to rally a group of people to achieve a shared goal using crypto native tools (e.g., smart contracts). Most DAOs are:

  • Decentralized: No c-suite or hierarchical leadership.
  • Autonomous: Smart contracts offload manual labor such as distributing capital.
  • Organization: A group of people with a shared mission abides by a set of rules.


DAOs let people worldwide contribute to a project, pool funds, and build the next big thing.

DAOs have both advantages and disadvantages compared to companies:

  • Advantages include letting more people contribute, participate in decisions, and own the upside, as well as radical transparency of funds (everything is usually conducted via a public blockchain).

  • Disadvantages include having to coordinate a community in a decentralized manner. There’s a reason companies are formed in a hierarchical way, and it can be hard for DAOs to “get stuff done”. Nevertheless they represent an exciting alternative structure for companies and organizations.

In our next section, we’ll cover: “How does web3 help creators?”

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