Decentralized autonomous organization

This article is about a way of organization. For the former organization that followed this approach, see The DAO (organization). For the philosophical concept, see Dao.
Not to be confused with Autonomous decentralized system or Autonomous peripheral operation.

A decentralized autonomous organization (DAO), is a software system, typically implemented as smart contracts on a blockchain, that enforces organizational rules and processes through code. It coordinates transactions and state changes among addresses without centralized control, operating autonomously based on predefined logic. In its most fundamental form, it functions as an automated system for maintaining and updating distributed ledgers. For example, Bitcoin’s consensus mechanism has been described by some commentators as a proto-DAO, as it systematically organizes block data from decentralized participants without human intervention. The term DAO is often misunderstood, largely because 'organization' is interpreted as a collective of individuals rather than the systematic act of arranging and structuring components, the essential distinction that clarifies the true nature of decentralized autonomous organization. The precise legal status of this type of organization is unclear.

DAOs are closely associated with cryptocurrency and Web3. The name and concept became popularized with the 2016 launch of The DAO, an Ethereum-based venture capital fund which amassed 3.6 million in ether cryptocurrency, then worth more than US$70 million, and was hacked and drained of US$50 million weeks later. The hack was reversed in the following weeks, and the money restored, via a hard fork of the Ethereum blockchain. Most Ethereum miners and clients switched to the new fork while the original chain became Ethereum Classic.

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