What Is a DAO?
Building a Definition
DAO stands for "Decentralized Autonomous Organization." But what does that mean?
We can start by looking at each word individually. To start, we must understand that the the key term is "Organization" and the other terms modify that.
- Organization (noun): a group of persons organized for some end or work
The preceding terms modify Organization. So lets define them.
- Decentralization (noun): the dispersion or distribution of functions and powers
- Autonomous (adj.): existing or capable of existing and acting independently
We can put these definitions together and see what we get:
A group of persons, who are capable of acting independently, with distributed functions and powers to complete some goal or work.
Refining Our Definition
An interesting conclusion that we can take from this definition is that it avoids one of the common critiques of many DAOs: That they cease being autonomous when human governance and participation are involved. These critiques assume that autonomy lies at the level of the organization (i.e. it must be able to act on it's own). But if instead the autonomy lies with the actors within the organization then there is no need for the DAO be able to act without human input. Human input may still be necessary, but instead of being prescribed by a pre-determined set of rules and hierarchies, this input is self directed and governed by an emergent set of rules.
These rules are emergent in that they arise from the actions and efforts of a broad set of actors all working autonomously to define them. They are inherently malleable and will evolve over time as the actors in the network gain more information and update their beliefs and understandings of the DAO. These emergent rules and the resources that are deployed using these rules are the DAO.
So we now can come back to our definition of a DAO and create a more specific definition:
“A distributed network of autonomous agents coordinating resources and developing rules to complete some goal or work.”
A DAO can then use these rules to collectively make and come to consensus on a wide range of decisions.