A DAO (decentralized autonomous organization) is a community-governed organization that runs on a blockchain. It has no central manager; its rules are written into smart contracts and executed automatically by code. This guide explains it.
How it works
A DAO uses a decentralized ledger — a blockchain — to coordinate the organization and its funds, most commonly for voting and finances [1]. It needs no central authority: the group makes decisions collectively, and when a vote passes, payments are authorized automatically [2].
How a DAO works
Membership and voting
When a DAO is formed, founders often mint a governance token that can grant holders DAO membership and voting power — typically, the more tokens someone holds, the more votes they have [2]. This ties governance to the community, but can also concentrate voting power.
The bottom line
A DAO is an organization governed by community votes, with smart contracts standing in for traditional management. It embodies a decentralized way of collaborating, though its efficiency and fairness are still being worked out. To keep learning the fundamentals, follow more from Bitbase Academy.
Disclaimer: This article is educational content from Bitbase Academy, provided for information only. It does not constitute investment, trading, tax, or financial advice. Written as of June 2026; refer to the latest official information.
References
[1] Ethereum.org, "What is a DAO?" ethereum.org
[2] Coinbase, "What are Decentralized Autonomous Organizations (DAO)?" coinbase.com
