Decentralized Autonomous Organization (DAOs): The Definitive Guide

This is the definitive guide to decentralized autonomous organization (DAOs).

So if you want to:

• Know what a DAO means
• Learn how a DAO works
• Explore decentralized autonomous organization use cases
• Join / create a DAO

Then you will love this new guide.

Let’s get started.

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Starting a business with others usually means putting a lot of trust in people—especially when money is involved. But what if you could build and run an organization without having to trust anyone personally?

That’s exactly what a Decentralized Autonomous Organization (DAO) makes possible.

DAOs replace traditional management with code-based rules that anyone can verify.

Everything runs transparently, and decisions are made by the community, not a single boss. Let’s break it down.

Understanding DAOs

A DAO is a new kind of online organization where people with shared goals come together to make decisions collectively. It’s fully digital and built on blockchain technology.

In simple terms, think of a DAO as an internet-native business that’s owned and managed by its community members.

There’s no central authority. Instead, members make decisions together through proposals and votes.

How DAOs Work

Every DAO has its own set of rules written into smart contracts—self-executing code on the blockchain.

These rules define how decisions are made, how funds are managed, and who can do what.

When members want to make a change—say, spend funds or start a new project—they submit a proposal. Then, everyone gets to vote.

The majority decision decides what happens next.

All actions, votes, and transactions are public and recorded on the blockchain. So, nothing is hidden, and everyone can see how the organization operates.

No Central Control

Unlike traditional companies, DAOs don’t have a CEO or manager making all the calls.

There’s no one person with special privileges. Instead, DAOs use built-in treasuries—pools of funds that no one can touch without group approval.

This ensures full transparency and prevents misuse of money. Every decision must go through a fair voting process.

Why DAOs Matter

DAOs make it possible for people around the world to collaborate and build together without worrying about trust or control.

You don’t need a central office or a legal structure—just shared goals and a transparent set of rules on the blockchain.

This model opens up a world of opportunities. People can work, invest, and create value together, no matter where they are.

In Short

A DAO is a community-driven organization that runs on code instead of trust. It’s fair, transparent, and borderless—built for a world where people can collaborate freely without middlemen or managers.

It’s not just a new way to organize—it’s the future of how people come together to build things online.

Differences between traditional organizations and DAOs

Traditional organization	DAOs
Activity is private and limited to the public	Changes can be demanded from a single party
Typically hierarchy	Fully flat and democratized
Changes can be demanded from a sole party	Changes can be demanded from a single party

A Decentralized Autonomous Organization (DAO) runs on code, not people. But how does that actually happen?

Let’s break it down into simple steps so you can see how a DAO comes to life and operates without a traditional boss or company structure.

Every DAO has three main parts: smart contract creation, funding, and launch.

Each stage builds on the previous one to make the DAO fully functional and independent.

Smart Contract Creation

Everything starts with a smart contract—the backbone of every DAO.

A smart contract is a piece of code written on the blockchain. It defines the DAO’s rules, automates decisions, and holds the group’s treasury.

The founding team sets these rules before launch, making sure the system knows exactly what to do when certain actions happen—like approving a proposal or releasing funds.

Because everything is on the blockchain, the rules are public and verifiable. Anyone can check how the DAO works before joining.

This transparency builds trust among members and ensures the system is fair.

Before launching, the code goes through multiple tests to make sure it’s solid.

Once the smart contract is deployed, it becomes tamper-proof—no one can secretly change it.

Any updates or changes must go through a group vote, and everyone can see the results in real time.

Funding

Next comes the funding phase.

At this point, the DAO figures out how to raise money and distribute voting power. People who believe in the DAO’s mission can buy tokens or contribute funds.

These tokens often act as both investment and voting rights, giving holders a say in how the organization runs.

This stage also helps set up governance rules—the system that decides who votes, how proposals are created, and how the DAO makes collective decisions.

So, funding isn’t just about collecting money—it’s about building a community of people who have skin in the game and want to see the DAO succeed.

Launch

Finally, it’s time to launch.

Once the smart contract is live, the DAO is fully autonomous. No single person can change its rules or control its funds.

Everything that happens next is decided by the community through voting and proposals.

If someone wants to suggest a new idea or change a process, they submit a proposal.

Members vote, and if the majority agrees, the action automatically executes based on the rules set in the smart contract.

From that point on, the DAO runs independently—powered by code, guided by its members, and protected by transparency.

In Essence

A DAO works because of its smart contracts, funding system, and community-driven launch.

Each step ensures that no one person holds power and that every action is open for all to see.

It’s a system built on trust in code—not people—and that’s what makes DAOs one of the most powerful innovations in the blockchain world.

Not every DAO works the same way. Some are open to everyone, while others are more selective.

The type of membership a DAO uses determines how people join, vote, and contribute to decisions.

There are two main types of DAO membership: share-based and token-based.

Let’s break them down in simple terms.

1. Share-Based Membership

A share-based DAO is like a close-knit club. It’s built on trust, collaboration, and shared goals rather than open access.

These DAOs are common among charities, investment groups, and smaller communities where members know each other or share a specific purpose. They focus on human interaction as much as on blockchain governance.

To join, you can’t just buy your way in. You usually need to submit a proposal showing your skills, experience, or financial contribution. The group then reviews your request and decides if you’re a good fit.

Example: MolochDAO

MolochDAO is a great example of a share-based DAO. It funds Ethereum development projects and only accepts new members through a proposal and approval process.

This ensures that everyone involved adds real value and shares the DAO’s mission.

2. Token-Based Membership

A token-based DAO is open and accessible to anyone who holds its governance token. It’s designed for broad, decentralized communities where participation is based on ownership, not personal connections.

Here, tokens act as your membership card and voting power. The more tokens you hold, the more influence you have in decision-making.

Joining is simple—just buy the DAO’s token from a decentralized exchange and you’re in. There’s no approval process or gatekeeping.

Example: Uniswap

Uniswap is one of the best-known token-based DAOs. Anyone who holds its governance token, UNI, can vote on proposals that shape the platform’s future. It’s open, democratic, and driven by the community.

Essentially, share-based DAOs focus on trust and collaboration, while token-based DAOs focus on openness and participation.

Both models work—what matters is the DAO’s goal. If the mission requires tight teamwork, a share-based membership structure is the best fit. But if the goal is wide participation and transparency, token-based membership is the way to go.

Now that you understand what DAOs are and how they work, let’s look at some real-world examples.

These projects show how DAOs bring people together to manage money, make decisions, and shape the future of blockchain — all without a central authority.

Compound Finance

Compound Finance is one of the best-known DAOs in decentralized finance (DeFi). It’s an algorithmic money market that lets you lend and borrow crypto by using other assets as collateral.

Here’s where the DAO comes in:

The Compound community decides how the protocol evolves. Members vote on which new markets to add, how to distribute the COMP token, and how to manage the protocol’s large treasury.

Anyone holding COMP tokens can take part. There’s no sign-up, no KYC, and no central boss—just people coming together to make decisions for the good of the community.

Uniswap

Uniswap is one of the biggest decentralized exchanges in the world. It uses an automated market maker (AMM) system to let users swap tokens without relying on a middleman.

The DAO part comes through the UNI token. UNI holders have full control over governance. They vote on upgrades, fee structures, and other key protocol decisions.

In a nutshell, Uniswap is community-owned and community-run. Every token holder has a say in where the project goes next.

Jenny Metaverse DAO

JennyDAO takes the DAO concept into the NFT world. It allows people to own fractions of NFTs rather than having to buy an entire one.

All NFTs are stored in a vault controlled by smart contracts, and members decide which NFTs to buy or sell. Holders of the Jenny Token vote on important decisions, making NFT investment a collective effort.

This setup makes it easy for people to participate in the NFT space without needing huge capital.

MakerDAO

MakerDAO is one of the oldest and most influential DAOs. It’s the organization behind DAI, a stablecoin pegged to the U.S. dollar.

Members of MakerDAO hold MKR tokens, which give them voting power. They use these tokens to decide things like collateral requirements, stability fees, and protocol upgrades.

Every major change goes through a community vote. This ensures that no single entity controls DAI, keeping it transparent and decentralized.

These DAOs — including Compound, Uniswap, JennyDAO, and MakerDAO — demonstrate how blockchain communities can collaborate to create powerful, self-governing systems.

Each one runs differently, but the goal is the same: to put power back into the hands of the people who use the platform.

As technology keeps evolving, DAOs are becoming more powerful and practical.

With advances in artificial intelligence, blockchain, automation, and the Internet of Things (IoT), the potential of DAOs is expanding fast.

In this section, let’s explore some real-world use cases that show how DAOs are shaping industries and redefining how people work together.

Decentralized Autonomous Companies (DACs)

One of the most exciting DAO use cases is Decentralized Autonomous Companies (DACs).

These are companies that remove the traditional corporate hierarchy — no CEOs, no managers — just smart contracts and community-driven decisions.

A great example is ShapeShift, a Denver-based crypto trading company.

ShapeShift transitioned from a traditional business structure into a DAO to give its community full control. Every major decision, from product upgrades to financial planning, now goes through community voting.

This model creates a more transparent and fair organization where everyone has a voice.

Decentralized Autonomous Vehicles (DAVs)

Another emerging use case is Decentralized Autonomous Vehicles (DAVs).

Imagine a future where your car runs itself, earns money when you’re not using it, and interacts directly with other vehicles or users — all through blockchain.

The DAV Network, a blockchain-based transportation protocol, is working to make this possible. It aims to create a decentralized network for ride-sharing, drone delivery, and self-driving vehicles.

Through smart contracts, cars and drones can autonomously handle payments, routes, and maintenance — no central company required.

Investment and Venture DAOs

Investment DAOs are transforming how people invest in startups and crypto projects.

Members pool funds and vote collectively on where to invest. This gives everyday investors access to deals that were once limited to venture capital firms.

Examples include MetaCartel Ventures and The LAO, both of which fund early-stage blockchain startups through community governance.

These DAOs give investors a fairer, more transparent way to build wealth together.

Charity and Social Impact DAOs

DAOs are also changing how people give back. Charity DAOs enable communities to collectively decide which causes to support.

Every donation is recorded on the blockchain, so funds are transparent and traceable.

Big Green DAO, for instance, empowers donors and nonprofits to collaborate directly, eliminating intermediaries and reducing overhead costs.

This model ensures that more funds go straight to the people and projects that need them most.

Creator and NFT DAOs

Artists, musicians, and creators are forming NFT DAOs to take back control from centralized platforms.

These DAOs let creators collaborate, fund new projects, and share profits directly with their communities.

For example, PleasrDAO brings collectors together to purchase and manage culturally significant digital art.

The members decide collectively which NFTs to acquire and how to use or exhibit them.

This gives artists fairer pay and fans a stake in the art they love.

Gaming DAOs

Gaming DAOs are reshaping the gaming industry by giving players ownership and governance power.

Members vote on in-game assets, game development decisions, and profit-sharing mechanisms.

An example is Yield Guild Games (YGG) — a DAO that invests in NFT-based games and helps members earn income through play-to-earn models.

This shifts the power from game studios to the players themselves.

In Summary

DAOs are no longer just experiments — they’re real organizations changing how businesses, communities, and even vehicles operate.

From investing and gaming to charity and transportation, DAOs are proving that decentralized collaboration is the future of work and innovation.

DAOs are unlike any traditional organization you know. They don’t have CEOs, managers, or offices.

Instead, they run through smart contracts and community votes on the blockchain. Sounds futuristic? It is — but it’s already happening.

So, if you’re curious about joining or even creating a DAO, here’s how to get started.

Joining a DAO

Before joining a DAO, it’s important to understand what kind of organization it is.

Every DAO has its own purpose, rules, and governance model. Some focus on investing, while others support art, gaming, or community causes.

To find the right one, do your own research (DYOR). Look at how the DAO operates, how decisions are made, and whether its goals match yours.

Once you find one that fits, you can usually join by buying or earning its governance token. That token gives you voting rights and a voice in how the DAO runs.

Creating a Decentralized Autonomous Organization

If you want to start your own DAO, it’s easier than you might think — but it requires a clear vision and some careful planning.

Here’s a simple four-step process to follow:

Step 1: Build a Strong Foundation

First, gather a small group of like-minded people and decide why your organization should be a DAO. Talk about its purpose, how it will work, and what it will do.

You’ll also need to outline the rules that will guide your DAO. These rules are written into smart contracts so that everything runs automatically and transparently.

Next, decide how your DAO will generate revenue. Many DAOs earn income through investments and share profits (called dividends) with members.

Step 2: Establish Ownership

DAOs typically decide ownership in two ways — rewards and airdrops.

• Rewards: Members earn tokens for completing tasks or hitting milestones.
• Airdrops: Tokens are distributed to community members based on their past contributions or support.

Both methods help build a fair and active community.

Step 3: Set Up a Governance Model

Now, decide how members will make decisions once your DAO is live.

Most DAOs use one of two systems:

• Share-based voting, where votes are tied to membership shares.
• Token-weighted voting, where each token equals one vote.

Members can submit proposals using tools like Snapshot, and once the community votes, the results are automatically executed through smart contracts.

Step 4: Design Rewards and Incentives

Finally, set up incentives to keep members engaged and motivated.

Rewards can come in many forms — crypto payments (like ETH or USDC), special titles, or even access to exclusive DAO features. These benefits build trust and loyalty among members and help the DAO thrive.

Final Thoughts

Joining or creating a DAO gives you a chance to be part of something truly decentralized — where power lies in the hands of the community.

Whether you’re investing, collaborating, or building a new project, DAOs offer a fresh, transparent way to work together and create real impact in the digital world.

Governance is the heart of every DAO. It’s how members make collective decisions, manage funds, and guide the community’s direction — all without a central authority.

Instead of meetings and paperwork, DAOs use smart contracts to handle these tasks automatically. That means decisions are transparent, efficient, and community-driven.

Now, let’s explore how DAO governance works and the tools that make it possible.

Understanding Decentralized Autonomous Organization Governance

DAO governance is simply how members agree on what happens next — whether it’s funding a project, updating a rule, or managing a treasury.

The beauty of it? Everything happens through smart contracts and community votes. Once a decision is made, the contract automatically carries it out.

There are many open-source tools you can use to automate this process. They all aim for the same goal — smooth decision-making — but they work in slightly different ways.

Some handle everything on-chain, while others rely on off-chain voting for speed and flexibility.

Let’s go through some of the best tools available today.

Tools to Automate DAO Governance

Aragon

Aragon lets you create and manage DAOs on Ethereum, Polygon, and Harmony.

It’s one of the most popular frameworks for building decentralized organizations.

The Aragon project itself runs as a DAO, supported by a non-profit that manages its funds.

You can create proposals, vote, and manage treasury operations directly within the platform.

Snapshot

Snapshot is a powerful off-chain voting system. It uses digital wallet signatures to collect votes from members across multiple blockchains.

This makes it perfect for DAOs that have tokens on several networks. Votes happen off-chain, but decisions are recorded securely and transparently.

DAOhaus

DAOhaus is a no-code platform that makes it easy to create or join DAOs.

You can browse existing DAOs or launch your own in just a few clicks. Once you start, DAOhaus automatically gives you a landing page for members to join and pledge support.

It even includes a mobile app, Pokermol, that makes voting and proposal interactions simple.

DAOstack

DAOstack is an open-source framework focused on building scalable, decentralized governance models.

It offers pre-built templates that help you create DAOs where smart contracts handle tasks like funding, operations, and community voting — just like a self-running company.

Coordinape

Coordinape helps DAOs manage day-to-day operations. It’s used for team coordination, task tracking, and payroll across global teams — even when members are anonymous or spread across time zones.

It’s a practical tool for keeping DAO contributors aligned and rewarded for their efforts.

Key Areas of DAO Governance

DAO governance covers several important areas. Each helps keep the organization healthy, transparent, and sustainable.

Asset Curation

DAOs often manage assets — from crypto investments to NFT collections. Members vote on which assets to acquire, sell, or stake for rewards.

Risk Management

Market conditions, volatility, and security risks require constant monitoring. Governance tools help members track these risks and respond quickly.

Collective Ownership

Deciding how to use shared funds is a key part of DAO life. This includes managing treasuries, allocating budgets, and balancing income and expenses — all in a decentralized way.

Using Pods to Organize Decentralized Autonomous Organization Teams

As DAOs grow, managing everything in one place becomes difficult. That’s where Pods (or sub-DAOs) come in.

Pods are smaller teams within a DAO that focus on specific areas like development, marketing, or community management.

Each pod operates independently but still follows the main DAO’s goals.

A great example is Yearn Finance. As the platform expanded, it split into several sub-DAOs to handle areas like protocol development and user experience. This made Yearn faster, more efficient, and easier to scale.

Why Automation Matters in DAO Governance

Automation keeps DAOs running smoothly as they grow. By using smart contracts and clear governance tools, members can reduce errors, avoid human bias, and speed up decision-making.

At the same time, successful DAOs stay flexible. They constantly review their processes, improve weak areas, and add new tools as they evolve.

The best DAOs don’t just automate decisions — they use automation to empower their communities and make governance simpler, faster, and more transparent.

DAOs come in many forms. Each one serves a different purpose depending on its structure, technology, and how it operates.

Let’s look at the main types of DAOs and what makes each one unique.

DAO Type	Main Purpose	Example Projects
Protocol DAO	Governs blockchain protocols and system upgrades	Uniswap, Compound, MakerDAO
Collector DAO	Pools funds to buy and manage NFTs or digital art	PleasrDAO, FlamingoDAO
Operating System DAO	Provides tools and infrastructure for creating other DAOs	Colony, DAOstack, Aragon
Service DAO	Connects skilled contributors with projects that need help	RaidGuild, MetaCartel
Grants DAO	Funds new ideas and innovation through community voting	Aave Grants DAO, Gitcoin
Entertainment DAO	Supports creative projects and community-driven media	Bored Ape Yacht Club DAO
Media DAO	Rewards content creators directly without advertisers	ForeFront, Bankless DAO
Social DAO	Builds networking and collaboration communities	Seed Club, Friends with Benefits
Investment DAO	Pools capital for DeFi or startup investments	Krause House, Syndicate DAO
Technology Layer DAO	Provides blockchain-based frameworks for other DAOs	Aragon, DAOstack

Each type of DAO serves a unique purpose — from managing investments and funding innovation to empowering creators and communities.

Together, they form the foundation of a decentralized digital economy where everyone has a voice and ownership.

Protocol DAOs

Protocol DAOs focus on managing changes to blockchain protocols. Members use governance tokens to vote on upgrades, rules, and new features.

A great example is Uniswap — one of the biggest decentralized exchanges (DEXs).

Uniswap gives its UNI token to liquidity providers, who can then vote on key decisions about how the platform runs.

This system keeps control in the hands of the community instead of a central authority.

Collector DAOs

Collector DAOs bring art lovers and NFT enthusiasts together. They pool funds to buy, manage, and own digital art collectively.

For instance, PleasrDAO is famous for purchasing rare NFTs and culturally significant digital artworks. Members share ownership and vote on how to manage the collection.

This type of DAO helps artists and collectors build stronger, more transparent relationships.

Operating System DAOs

Operating System DAOs are the backbone tools that make it easy to create and run other DAOs.

Platforms like Colony and DAOstack offer ready-made frameworks that anyone can use to launch a DAO without writing code from scratch.

They’re like the WordPress of the DAO world — giving you the base you need to build your own community.

Service DAOs

Service DAOs connect skilled people with projects that need help.

For example, RaidGuild works like a decentralized agency. It gathers talent from around the world and offers services like web development, design, and marketing to other Web3 projects.

These DAOs are all about collaboration and rewarding contributors for their skills.

Grants DAOs

Grants DAOs focus on funding innovation.

Community members contribute money to a shared pool and then vote on which projects should receive funding.

These DAOs are especially common in the DeFi space. They support builders, developers, and creators who are pushing new ideas forward.

It’s a great way to make sure resources go to the most promising projects.

Entertainment DAOs

Entertainment DAOs let creators and fans collaborate on media and creative projects.

For instance, Bored Ape Yacht Club (BAYC) has plans to launch its own entertainment DAO. It will allow token holders to vote on creative ideas and influence the direction of the brand’s future content.

These DAOs turn creativity into a community-driven experience.

Media DAOs

Media DAOs give power back to content creators and readers.

Instead of relying on advertisers or big media companies, contributors earn tokens for sharing valuable content.

This model builds trust and rewards creators directly for their work — making media truly community-owned.

Social DAOs

Social DAOs are all about community and networking.

They bring together people with shared interests to connect, collaborate, and grow.

One well-known example is Seed Club, a DAO that helps build and support tokenized communities. Everyone gets a fair voice, and decisions are made collectively.

These DAOs make online communities more inclusive and democratic.

Investment DAOs

Investment DAOs, also known as Venture DAOs, pool funds from members to invest in DeFi projects, startups, or digital assets.

They make investing more accessible and transparent, giving smaller investors a chance to join opportunities that were once limited to big firms.

A fun example is Krause House, a DAO made up of basketball fans with a goal to one day buy an NBA team.

It’s community investing with a twist.

Technology Layer for DAOs

Every DAO runs on a blockchain, which acts as its foundation.

Companies like Aragon and DAOstack have built the technology layers that power many DAOs today. They use Ethereum’s Solidity language to create systems that are flexible and secure.

However, you don’t always need to start from scratch. You can fork an existing DAO framework, customize it, and create one that fits your exact needs.

The beauty of DAOs lies in their diversity. From creative communities and investment collectives to grant programs and governance systems — there’s a DAO for almost everything.

As technology evolves, we’ll see even more types of DAOs shaping how people collaborate, create, and make decisions online.

Decentralized Autonomous Organization (DAOs) are changing how people work and make decisions. They remove middlemen and give power directly to the community.

With DAOs, every vote counts, and everything is transparent on the blockchain.

From funding projects to managing DeFi platforms, they make teamwork fair and open.

As tech and Web3 tools grow, DAOs will become even smarter and more inclusive.

In summary, DAOs represent the future of trust, freedom, and collaboration — powered by code and community.