What is Decentralization Autonomous Organization (DAO)

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What is Decentralization Autonomous Organization (aka DAO)

In this post, I will introduce what is DAO, and I will introduce how to start a DAO in next post. So here is a definition from Aragon - - Member-owned communities without centralized leadership. - A safe way to collaborate with internet strangers. - A safe place to commit funds to a specific cause.

DAO definition on Ethereum.org

So let’s go into details about DAO from 3 perspectives:

  1. D - Decentralized
  2. A - Autonomous
  3. O - Organization

so why people care about decentralization? This is because decentralization leads freedom, let’s see some examples:

  • Bitcoin - permissionless ledger, the asset is free (no one can “steal” your assets, e.g governments “steal” your assets by tax or inflation)
  • Ethereum - smart contract, so the contract is free, everyone could have a contract defined the rules and the contract will be implemented automatically when the rules are met.
  • Defi - the transaction is free (no KYC, everyone could join the peer to peer transactions)
  • DAO - the organization is free (everyone could make an organization or join an organization)

So we can see DAO, which could free the potentials inside organizations, everyone could build his own organizations.

The DAO is not arbitrary, but it is a balance (from 3 perspectives)

todo - dao-vs-company.png pic

  • Decentralized <—> Centralized
  • Autonomous <—> Dependent
  • Organization <—> Group


D means Decentralization, but we can see there is no truly decentralized, because there are different perspectives and levels for decentralization, e.g

  • people (working space)
  • governance (or decision making)
  • voting
  • etc.

So for most DAO comparing with company, the onboarding (aka joining) and working space are more decentralized, but the governance and voting are still part of centralized. (I don’t believe it could be totally decentralized for the governance for DAO, except for Bitcoin)

But even it is part of decentralization, DAO could releash the potentials of each individuals. Because everyone could join a DAO they are interested in (motivated), and could contribute to the DAO.


DAO should be autonomous, not a division of some company. So in DAO, the DAO itself could make decisions for their tasks, monitor and manage work, design team and organizational context and even set overall directions. [From Richard Hackman Authority Model]

todo - Richard Hackman team authority model pic

The DAO is more like an organization who can self sovereign. But the organization in a company is more like self managing or self designing teams.

When a DAO scales up, there could be DAOs in DAO. Each DAO could be a bit separate and independent, but they have the shared mission and goals.

It is like in diagram 1 for the balance, DAO is more autonomous than company.


A bunch of people are not an organization (or a team), it is just a group. There are some key differencies between organization and group:

| Organization | Group |
| —- | —- | | shared goal | individual goal | | shared accountability | individual accountability | | collective success | individual success | | more collaboration | more heroism |

So the (DAO) organizations must have its own goal or purpose. Without clear goal, it is not the DAO, maybe just a group. For example, there could be a chat group on telegram or Discord.

The DAO Categories

There are lots of kinds DAO for now, e.g (I have listed some examples of DAO here)

  • protocol DAO
  • venture DAO
  • social DAO and meme DAO

Maybe there would be more different categories for DAOs, but we could see there are the examples for each category.

Protocol DAO

I knew DAO (concept) since the DAO hard fork story on Ethereum. The recent 2 years along with Uniswap (DEX) raised up, DAO is becoming hot again. Some examples for protocol DAO are: Uniswap, Compound, etc.

Venture DAO

There are some DAOs for investment like The LAO and MetaCartel Ventures.

The LAO is a global group of Ethereum enthusiasts and experts supporting the work of Ethereum builders.

MetaCartel’s mission is to accelerate the creation of Web 3 with the belief that it will make the world a richer, fairer place.

Social (and Meme) DAO

Recently there are some DAOs like ConstitetionDAO and Gas DAO, actually for these DAOs, they won’t build the product (at least for now), but gathered many people together to do the same things.

I cannot understand these DAOs very well for now, unless they started to build something.

DAO components

From my view, DAO is more like a country other than a project (or product). So there are many components in a DAO as following:

  • onboarding
  • payment
  • decision making (governance or voting)
  • treasure management
  • knowledge management
  • discussion
  • identity

Because there are many DAOs in recent year (2021), so there are many pain points in DAO field as well, I will not describe the pain points in this post, but will have a separate one post for them.

My next post is about how to join a DAO (in special my own experience in GitcoinDAO).


  1. https://ethereum.org/en/dao/
  2. https://blog.aragon.org/what-is-a-dao/
  3. https://medium.com/1kxnetwork/organization-legos-the-state-of-dao-tooling-866b6879e93e