{% hint style="success" %} Contributors: @rajkaria, @paarug, @namanchordia {% endhint %}
A DAO is often described as sort of a “Reddit community with a bank account.”
In an attempt to formalise this definition, we can say it’s an organisation structured in a way that the control and ownership of its decisions are decentralised and spread out amongst its members through some rules that are enforced on the blockchain.
In a DAO, the jobs that have to be carried out are determined by pre-written smart contracts.
The backbone of a DAO is its smart contract. The contract defines the rules of the organisation and holds the group’s treasury. Once the contract is live on Ethereum, no one can change the rules except by a vote. If anyone tries to do something that’s not covered by the rules and logic in the code, it will fail. And because the treasury is defined by the smart contract too that means no one can spend the money without the group’s approval either. (via ethereum.org)
This is a key element in the functioning as the pursuit of code being law is very much evident here at a micro and organisational level just like it is in the larger scheme of things with cryptocurrency and the DeFi industry as a whole.
Another key feature of how a DAO functions is the distribution of the decision making powers which are usually done proportionately to the amount of contribution each person makes to the DAO. This is a step up from the organisations of web2 as it not only goes away from the traditional corporate hierarchies but also gives each member a say over what moves should the organisation make next.
{% embed url="https://www.youtube.com/watch?v=8VFg67z7XYQ&feature=emb_title" %}
{% embed url="https://linda.mirror.xyz/Vh8K4leCGEO06_qSGx-vS5lvgUqhqkCz9ut81WwCP2o" %}
{% embed url="https://twitter.com/petergyang/status/1447605297808232448" %}
{% embed url="https://twitter.com/divine_economy" %}
If you have any doubts related to this topic or you have a suggestion, feel free to create an issue here.
If you want to make edits to this topic or update the topic, please click on the "Edit on Github" link you see on the right section, make the changes and create a pull request to the master branch. One of the moderators will look at your changes & merge your changes if all looks good.
And yes, if you update anything in this topic, don't forget to add your GitHub username in the contributors' list!
Have a happy learning! ✌️