Distributed autonomous organization

A decentralized autonomous organization (DAO), sometimes labeled a decentralized autonomous corporation (DAC), is an organization that is run through rules encoded as computer programs called smart contracts. A DAO's financial transaction record and program rules are maintained on a blockchain. There are several examples of this business model. The precise legal status of this type of business organization is unclear.

The best-known example was The DAO, a DAO for venture capital funding, which was launched with $150 million in crowdfunding in June 2016 and was immediately hacked and drained of US$50 million in cryptocurrency.

Decentralized autonomous organizations have been seen by some as difficult to describe. Nevertheless, the conceptual essence of a decentralized autonomous organization has been typified as the ability of blockchain technology to provide a secure digital ledger that tracks financial interactions across the internet, hardened against forgery by trusted timestamping and by dissemination of a distributed database. This approach eliminates the need to involve a bilaterally accepted trusted third party in a financial transaction, thus simplifying the sequence. The costs of a blockchain enabled transaction and of making available the associated data may be substantially lessened by the elimination of both the trusted third party and of the need for repetitious recording of contract exchanges in different records: for example, the blockchain data could in principle, if regulatory structures permitted, replace public documents such as deeds and titles. In theory, a blockchain approach allows multiple cloud computing users to enter a loosely coupled peer-to-peer smart contract collaboration.

Buterin proposed that after a DAO was launched, it might be organized to run without human managerial interactivity, provided the smart contracts were supported by a Turing complete platform.Ethereum, built on a blockchain and launched in 2015, has been described as meeting that Turing threshold, thus enabling DAOs. Decentralized autonomous organizations aim to be open platforms where individuals control their identities and their personal data.

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