What is Decentralized Autonomy?

DAO stands for Decentralized Autonomous Organization. It is a form of company organized and run via the Internet using an open source web-based software platform, which is controlled and funded by its members. A decentralized autonomous organization, also sometimes known as a decentralized autonomous corporation, is a company run by members who are not governed by a centralized corporate structure, yet are able to affect its governance. It is often confused with a self managed company, but it is not an organizational division of the latter.

It is a type of company that may be based on a new business idea, new business concepts or an entirely new technology, such as smart contract technologies or distributed ledgers. There are certain characteristics that distinguish DAO from traditional organizations such as corporations, partnerships and labor unions. One such characteristic is its ability to offer complete governance through a mechanism called smart contract technology, which enables a process of financial incentive to drive change in the organization without any need for a change in a majority of the board seats.

A DAO works on a flexible and open cooperative working model. This means anyone can join the DAO even if they do not have any substantial experience in this field, as the system is designed to build a community around it where people from different fields can contribute their ideas and expertise. In order to become a member of a DAO you first need to create a token, which represents your ownership in the DAO. After creating your token you can then participate in the governance process by using your smart contract to execute a series of trades in the form of derivatives, making you more or less rich depending on how well your position is positioned.