What Are DAOs?

What you'll learn

• A New Kind of Organization
• How DAOs Work at a High Level
• The Original DAO: Glory and Catastrophe
• The Modern DAO Landscape
• Types of DAOs in Detail
• DAOs vs Traditional Organizations
• Setting Realistic Expectations
• For Deeper Reading

Key terms

DAO

Decentralized Autonomous Organization. An entity governed by smart contracts and member voting rather than traditional management hierarchies. Rules are encoded in transparent, automatically enforced code on a blockchain.

Governance token

A cryptocurrency token that gives holders voting rights in a DAO or protocol. More tokens generally means more voting power, similar to shares in a company. Examples include UNI (Uniswap), COMP (Compound), and ARB (Arbitrum).

Governance proposal

A formal suggestion submitted to a DAO for community voting. Proposals can range from funding requests to protocol parameter changes to organizational decisions or partnerships.

The DAO

The first major DAO, launched on Ethereum on April 30, 2016. It raised $150 million from 11,000+ investors but was hacked on June 17, 2016 due to a reentrancy vulnerability, leading to the Ethereum hard fork that created Ethereum and Ethereum Classic.

Hard fork

A permanent divergence in a blockchain, creating two separate chains with different rules. The Ethereum hard fork on July 20, 2016 at block 1,920,000 reversed The DAO hack and created Ethereum Classic as the unforked chain.

Reentrancy attack

A type of smart contract vulnerability where a malicious contract recursively calls back into the victim contract before the victim has finished updating its state. This was the bug that drained 3.6 million ETH from The DAO in 2016.

Voter apathy

The problem of low participation rates in DAO governance, where most token holders do not actively vote on proposals. Participation rates below 10% are common even in major DAOs.

Sky (formerly MakerDAO)

A major protocol DAO managing the USDS and DAI stablecoins. Rebranded from MakerDAO in August 2024 under founder Rune Christensen, with SKY tokens replacing MKR at a 24,000:1 ratio.

ConstitutionDAO

A short-lived but viral DAO that raised $47 million from approximately 17,000 contributors in November 2021 to bid on an original copy of the U.S. Constitution at Sotheby's. It lost the auction to Ken Griffin's $43.17 million bid.

PleasrDAO

A collector DAO famous for acquiring culturally significant NFTs and digital assets, including the only copy of the Wu-Tang Clan album "Once Upon a Time in Shaolin" in 2021.

DeepDAO

The leading analytics platform for the DAO ecosystem, tracking more than 13,000 DAOs, treasuries totaling over $26 billion, and detailed participation data as of Q1 2026.