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Understanding DAOs

What are DAOs?

A decentralized autonomous organization (DAO), is an organization managed in whole or in part by decentralized computer programs, with voting and finances handled through a decentralized ledger technology like a blockchain. - Wikipedia

As Wikipedia defines, DAOs are emerging organizational structures that leverage blockchain technology to build transparent, multi-stakeholder communities. Unlike traditional organizations that rely on hierarchical structures and centralized control, DAOs operate through programmable smart contracts that execute decisions automatically based on community consensus.

When to use DAOs?

If you're part of a community that values transparency, inclusivity, and collective decision-making, DAOs are the ideal solution. They are particularly useful in scenarios such as:

  • A community-driven project where members want to have a say in the direction and management of the initiative
  • A DeFi protocol that requires ongoing governance for upgrades and changes
  • A research collective that needs to allocate resources and set priorities democratically
  • A social organization that aims to build a community around shared values and goals

This is not an exhaustive list and DAOs can be adapted to a wide range of use cases. The key is that they empower communities to self-organize and govern themselves without relying on traditional hierarchical structures.

How do DAOs work?

DAOs operate through a set of smart contracts that define the rules and processes for governance. The rules and processes are varied depending on the specific DAO, different communities may have different governance models, voting mechanisms, and decision-making processes. There are already many popular governance frameworks available that can be used to create DAOs, such as OpenZeppelin Governor, Aragon if you don't want to build everything from scratch.

Briefly, here's how it typically works:

  1. Defining Governance Rules

    The DAO's governance rules are encoded in smart contracts. These rules specify how decisions are made, how proposals are submitted, and how voting is conducted.

  2. Creating a User Interface

    Once the smart contracts are deployed, a user-friendly interface is needed for members to interact with the DAO. This interface should allow members to view proposals, cast votes, and track the status of decisions. This is where DeGov.AI comes in, providing an intuitive platform for DAO governance.

  3. Proposal Submission

    Members can submit proposals for changes, upgrades, or new initiatives. These proposals are then discussed and debated within the community.

  4. Voting Process

    Members vote on proposals using their governance tokens. The outcome is determined by the rules defined in the smart contracts, such as simple majority or super majority requirements.

  5. Execution of Decisions

    Once a proposal passes, the smart contract automatically executes the decision, whether it's transferring funds, updating protocols, or implementing new features.

Last update: October 24, 2025
Created: October 24, 2025