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DAO
A DAO, or โ€œDecentralized Autonomous Organization,โ€ is a community-led entity with no central authority. It is fully autonomous and transparent: smart contracts lay the foundational rules, execute the agreed upon decisions, and at any point, proposals, voting, and even the very code itself can be publicly audited.
Ultimately, a DAO is governed entirely by its individual members who collectively make critical decisions about the future of the project, such as technical upgrades and treasury allocations.
Generally speaking, community members create proposals about the future operations of the protocol and then come together to vote on each proposal. Proposals that achieve some predefined level of consensus are then accepted and enforced by the rules instantiated within the smart contract.
Familiar hierarchical structures seen within large corporations give way to community collaboration under this framework. Each individual member of the DAO oversees the protocol at some level.
Part of the elegance of this framework is the alignment of incentives. That is, it is in the individualโ€™s best interest to be forthright in their voting and only to approve proposals that serve the best interest of the protocol itself.
A healthy, robust protocol will garner more usage and in turn increase the value of the tokens of which each DAO member is in possession of, therefore, as the protocol succeeds, so does the token holders.
Last modified 2mo ago
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