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What are DAOs and How Do They Work?

3 Mins read

DAOs are the engine powering Web 3.0 like:

What are they?

This is how you explain DAOs to your Friends and Family – without overwhelming them.

DAOs 101: building decentralized Organizations

What are DAOs?

The easiest explanation is that: Decentralized Autonomous Organizations (DAOs), are self-governing organizations that enable groups of people to work towards a mutual goal. But let’s see what this means.

Defining DAOs, What it means is that DAOs are:

Decentralized = online, global

Autonomous = self-governing – bylaws were written in code

Organization = people working towards common goals and shared values

Now, let’s deconstruct these buzzwords.


DAOs are decentralized in many ways: • Infrastructure • Payments • Workforce • Governance • Community

“Ok, but what do you mean by that?”

DAOs have decentralized Infrastructure:

DAOs are powered by code that lives in the blockchain which means they can be accessed by anyone around the world. And what types of blockchains? Ethereum 

Read about Ethereum here: What is Ethereum and How it works

  1. DAOs have decentralized Payments:

As we know, the Ethereum network is constantly online, and so are payments in its native currency, Ether ($ETH). This means that DAOs can deal with any person or organization on the network too. And what type of payments? Payroll for your employees

  1. DAOs have a decentralized Workforce:

As they are global, DAOs can access labor anywhere in the world. Some DAOs recruit actively, while others are open to contributions from anyone willing to put in their time and effort.

  1. DAOs have decentralized Governance:

DAOs tend to have a simple structure where any member can propose an idea, and vote democratically on every decision. While some decisions are taken within the DAO software, many take place in different conversations.

  1. DAOs have decentralized Communities:

DAOs use discussion forums such as Discord and formal platforms to vote as Snapshot. And this is how DAOs manage a decentralized Community of people. Now that we get the D in DAOs, let’s see what the


This is where DAOs diverge from traditional organizations. Their infrastructure is software that can be run on any computer, anywhere in the world. Like any organization, DAOs can set their own rules on purpose, membership, and voting.


To get things done, we’ve always organized ourselves into groups, teams, companies, and other forms of collective action. That’s why some DAOs are groups of developers, investors, companies, charities, etc

Why do we need DAOs?

We don’t necessarily need them. They’ve emerged as a way to create incentives among people who want to work together towards common goals. Let’s see the following: Imagine you want to influence the company you work for…

The problem

The question is how can you do it? Until today the only way in which we can have a say in any Organization’s future is by being a Shareholder or Top Executive, right? Having shares of a Company is the best way to ensure you can have a say in its future. Why?

Because It grants you access to meetings where Executives discuss the Company’s future and vote on different proposals. But we, as workers of that Company can’t attend those meetings, having no say about our collective future.

But why?

Because there are no mechanisms to grant us access to it. Some of the best companies have tried. They give us shares, some Equity stake, etc. Still, it has never been enough. We can’t have a real influence unless we could vote…

The solution

And this is where DAOs come in. They solve this by allowing each DAO worker (aka contributor) to have Tokens to be able to vote on proposals. And what type of proposals? Proposals like how to use the DAO’s money, the Mission, Products to Develop, etc.


Tokens are like Shares of the DAO. It gives certain benefits to the ones who hold them like profit sharing, voting, etc.

“You might ask what types of DAOs exist?”

22 uses of DAO

Investment – Constitution DAO

Protocol – Uniswap

Service – Devs – Developer DAO

Project and community – Seed Clubhq

Community – Friends with Benefits – FWBtweets

DAOs – forefront

DeFiBankless DAO

Music – Song camp_

Sports – Krause House DAO

IRL NFT – Brt moments

Brands – protein

Media – Pub DAO

Research – water and music

Retreats – Creatorcabins

College – The Trojan Dao

Conferences – Padawan DAO

A&R – Dreams nevrdie

Vibes – Good karma DAO

Photography – The RAW DAO

Cities – City Dao


DAOs are like a company where the Company’s shareholders are the workers who, by holding a Token (like Shares), can submit and vote on different proposals. This way workers can have a say in the DAO’s future and see their goals aligned with the DAO’s goals.

If you want to read more about how the World is being transformed by DAOs, you can read here:



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