The Fundamentals of DAO

2 min readJun 7, 2021
The Fundamentals of DAO

Although the concept of decentralized autonomous organizations (DAOs) may appear complex, the concept is actually rather simple.

What Is a DAO?
A decentralized autonomous organization, or DAO, is an open-source blockchain system for automating activities in traditional organizations.

History of DAO
The DAO, which operated as a venture capital fund before its death, was the world’s first encounter with the decentralized autonomous organization idea. It was administered entirely by open-source code and without a traditional management structure or board of directors, unlike other venture capital firms.

The objective of a system like The DAO is to limit the amount of mistakes and financial manipulations that may occur in a typical organization operated by people.

The DAO was created to allow anybody in the world to invest in projects from anywhere in the world without fear of their assets being mismanaged. Additionally, token owners would be able to vote on projects through The DAO.

DAO Components
The rules and transaction records for a DAO’s functioning are stored in the blockchain. DAO governance tokens may be transferred publicly and readily audited via the blockchain, ensuring that the DAO’s operations are made in the best interests of DAO members.

Smart contracts on the blockchain are self-executing lines of code that contain agreements between participants to a transaction. Smart contracts are commonly used by developers to establish the rules that govern how DAOs work, from transactions to agreements between DAO members.

How to Use a DAO
To utilize a DAO, you must either build one or join one already existing. You’ll need a cryptocurrency wallet and a network of peers to work on the DAO’s purpose in order to construct a DAO you can utilize.

Following the establishment of the DAO’s rules, the group of peers may encode the procedures into a smart contract financed by the cryptocurrency wallet. This can be done using DAO-creation platforms such as RoboFi.


DAOs are changing the way centralized corporations and organizations operate. As more scalable blockchain software is produced and more governments across the world adopt legal frameworks to safeguard the interests of DAOs and its members, DAOs’ impact might rise considerably.