A decentralized autonomous organization (DAO) operates using blockchain-based smart contracts, removing the need for traditional management structures.

**DAOs and Decision-Making**:

DAOs lack centralized leadership, instead distributing decision-making powers among their participants. These participants hold tokens that give them voting rights on organizational changes.

**Basics of Autonomous Organizations**:

In a DAO, authority is decentralized, with all members sharing in decision-making rather than a single leader or small group. Members often use cryptocurrencies to participate in governance, a process enabled by "governance" tokens, which grant voting power. Token ownership signifies membership and gives users a proportional say in decisions, aligning power with each member's stake.

Once established, DAOs can function autonomously in daily operations through smart contracts—self-executing contracts with terms written in code that automate processes based on predefined rules.

DAOs may reward members with additional tokens for contributions, incentivizing participation and aligning efforts with organizational goals. Members might also stake tokens in related protocols for added commitment and perks. Each DAO has its own unique structure.

**Formation and Examples**:

DAOs can form around specific protocols or items of interest. For instance, ConstitutionDAO was formed in 2021 to attempt purchasing a rare copy of the U.S. Constitution, although it was unsuccessful.

**Cryptocurrency in DAOs**:

Cryptocurrencies are essential for DAO operations. Token holders can propose, vote on, and implement changes within the organization. This fosters responsibility among members, motivating them to act in the group's best interest.

Some well-known cryptocurrencies are DAO tokens, such as MakerDAO's MKR, which oversees the decentralized stablecoin DAI, Uniswap's UNI, which serves as a governance token for its protocol, and Compound's COMP, used in its decentralized lending and borrowing platform.