A DAO, or Decentralized Autonomous Organization, is represented by rules encoded as a transparent computer program, controlled by organization members, and not influenced by a central government. DAOs are a form of blockchain-based governance that uses smart contracts on a blockchain network, typically Ethereum, to facilitate the rules and decision-making processes of the organization.
Key features of a DAO include:
- Decentralization: Control is distributed among members rather than being centralized in a single authority.
- Autonomy: Operates automatically based on pre-defined rules encoded in smart contracts.
- Transparency: All transactions and rules are recorded on a public blockchain, allowing anyone to inspect them.
- Token-based Governance: Members often hold tokens that represent voting power, allowing them to vote on decisions, such as the allocation of resources or changes to the rules.
DAOs can be used for a variety of purposes, including investment, charity, fundraising, borrowing, and social media, among others. Examples of DAOs include MakerDAO, which manages the DAI stablecoin, and Uniswap, a decentralized exchange.
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