Lesson 4: DAOs - Decentralized Autonomous Organizations
Crypto World - Intermediate Level
← Back to TopicsWhat is a DAO?
A DAO (Decentralized Autonomous Organization) is an organization run by smart contracts and governed by token holders, not centralized authorities.
Analogy: A company without a CEO or board — everything is decided by the community through votes.
How DAOs Work
- Smart contracts set the rules and automate operations
- Token holders propose and vote on changes
- Funds are stored and managed by the DAO itself
- Decisions are transparent and recorded on-chain
Real-World Examples
- Uniswap DAO: Governs the Uniswap protocol
- MakerDAO: Manages the DAI stablecoin
- Aave DAO: Controls lending/borrowing features
- Friends With Benefits: A social DAO with community events
Benefits of DAOs
- Transparent and trustless governance
- Global community participation
- Decisions are made by the people
- Open source and censorship-resistant
Challenges
- Low voter participation
- Security vulnerabilities in smart contracts
- Legal and regulatory uncertainty
- Whale domination (large token holders control votes)
Next: Learn about the risks and security issues in the Web3 ecosystem.
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