Module 5.1

What is a DAO? (Concept and Legacy Comparison)

A Decentralized Autonomous Organization (DAO) is an organization represented by rules encoded as smart contracts, which can be collectively owned and managed by its members, and not influenced by a central government – at least in theory. The term “autonomous” highlights that some operations (like rule enforcement, treasury actions) can be automated by code given certain triggers (like a successful vote) rather than manual intervention. “Decentralized” implies decision-making power is distributed among stakeholders (often token holders) rather than concentrated in a traditional hierarchy.

In practical terms, a DAO is often a group of people with a common mission who use blockchain tools to coordinate:

Governance tokens or membership tokens to represent stake or voting power.
Proposals and voting systems to make collective decisions.
Smart contract treasuries (like Gnosis Safe, although Safe itself is multi-sig, not autonomous unless linked to votes) to manage funds according to the votes.
Transparency by default: all financial and governance actions are visible on-chain.

A traditional company, by contrast, has a charter, a board of directors, executives, and employees; decisions flow top-down or via formal meetings, and records might be private except for required disclosures. A DAO tries to flatten or at least democratize governance:

Token-based governance: If you hold governance tokens, you can vote (similar to shareholders, but often more frequent and granular voting than yearly shareholder meetings).
Community proposals: Members can put forth proposals for others to vote on (subject to certain rules or thresholds).
No central authority: Ideally, no CEO can override a vote; the group’s consensus is final.

Analogy: A DAO is sometimes compared to a cooperative or a consortium. Imagine a co-op where each member has a vote proportional to their stake, and any spending of the co-op’s funds is decided by member votes and then automatically taken from the co-op’s safe if approved. There’s no single boss – the bylaws (smart contracts) set the rules, and members enforce them through their votes.

However, many DAOs (including ours) still have some traditional structures for efficiency. Pure on-chain governance for every little decision can be slow; so often a core team (like Bittrees Inc’s operations team) is empowered to carry out day-to-day tasks within a mandate, and major decisions go to token holder vote.

(more information on Bittrees DAO Governance coming soon)

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