DAO (decentralised autonomous organisation)

A DAO is an organisation whose rules and treasury are managed by smart contracts and whose decisions are made by votes of token holders. Instead of a board of directors, members submit proposals, such as changing a protocol's fees or funding a project, and vote using governance tokens.

Many DeFi protocols, including Uniswap, Aave and Maker (now Sky), are governed by DAOs, which can control treasuries worth hundreds of millions of dollars. Other DAOs pool money to buy NFTs, fund public goods or invest.

The first high-profile DAO, called simply "The DAO", raised about $150 million worth of ETH in 2016 before a bug let an attacker drain a large share of it. That led to the Ethereum hard fork that created Ethereum Classic. Today, DAOs face practical problems: low voter turnout, voting power concentrated among large holders and insiders, and unclear legal status in most countries.