DAO: Decentralized Organizations That Manage Billions – A Guide

DAO (Decentralized Autonomous Organization) is an organization managed by members who hold governance tokens, through blockchain votes. There is no CEO, there is no board of directors – the code is the law.

How does DAO work?

1. The protocol issues governance tokens (eg Uniswap’s UNI). 2. Token holders can make change proposals. 3. Voting is open to all token holders. 4. A vote that passes is automatically realized by a smart contract.

Top DAOs

MakerDAO runs the DAI Stablecoin with $5B+ in assets. Uniswap DAO dominates the major DEX protocol. Aave DAO manages a lending protocol. ENS DAO manages the Ethereum Name Service. BitDAO manages a large pool of assets.

Issues and reviews

Concentration of power: sometimes large holders control the votes. Apathy: low participation in voting. Government vulnerabilities: flash loan attacks that manipulate votes. Slow decision-making compared to a traditional company.

The future of the DAO

DAO is durable and relevant despite the challenges. Discord, Snapshot and Tally are governance tools that have grown. Read about Yield Farming.

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