What is a DAO (decentralized autonomous organization)?

A DAO is an organization whose rules and governance are encoded in smart contracts on-chain, so decisions and operations run in a decentralized, transparent way rather than through a central management hierarchy.

A DAO is a group governed by a set of on-chain instructions instead of executives and paperwork. Its rules are explicit in code and visible to everyone, and members typically vote on-chain to decide how the organization acts (for example, how to allocate shared funds). The benefits are that participation and voting are easier, the rules are unambiguous ("black and white"), and everything is auditable directly on the blockchain — which is why DAOs are seen as a way to make governance more efficient, fair, and transparent. Because the members are often mutually distrusting and even anonymous, on-chain smart-contract governance — where the rules enforce themselves — is what makes coordinating them feasible without a trusted central authority.

Go deeper:

• Decentralized autonomous organization — Wikipedia — on-chain rules and member voting as an alternative to a management hierarchy.