DAO (Decentralized Autonomous Organization)
In short: A DAO, or decentralized autonomous organization, is a community-governed organization without centralized control.
A DAO, or decentralized autonomous organization, is a community-governed organization without centralized control. Its rules live in smart contracts on a blockchain, and members decide on changes by voting rather than by following a CEO or board.
Why it matters
DAOs are a common way to run DeFi protocols, shared treasuries and online communities in the open. Voting power is usually tied to a governance token, and approved proposals can be executed on-chain, so anyone can check how funds were moved and why. The model has weak spots too: a bug in the contracts can be exploited, voter turnout is often low, and a few large holders can dominate decisions. The legal status of DAOs also differs from country to country.
Example
A lending protocol is governed by a DAO. A member posts a proposal to change the interest rate model for one asset and explains the reasons on a public forum. Token holders vote during a fixed voting period, and if the proposal reaches the required quorum and majority, the change is applied through the protocol's smart contracts and recorded on the blockchain.