What is it about?
Just as the idea of making middlemen such as banks superfluous for financial transactions has existed since Bitcoin, the idea exists of making a company fully functional without hierarchical management. The word DAO in itself already gives a good impression of what the goal is.
How does it work?
The organization is encoded by a transparent computer program in the blockchain. The program is controlled and influenced in a decentralized manner, i.e. it is not subject to control by shareholders and the boards of directors and management delegated for this purpose or a central government.
Through distributed ledger technology, all transactions and rules of a DAO are registered transparently.
In a DAO, all decisions about financial activities are made by consensus. Proposals about the future plans and activities can be voted by the DAO participants.
A majority vote is required for a proposal to be accepted. The percentage required for a majority vote can vary and is defined in the code. The code of a DAO is always open source.
In order to participate in a DAO, only requires the purchase of the tokens of a particular DAO. The voting right increases proportionally with the number of purchased tokens.
