Template:What is DAO

Conventional entities such as for-profit and non-profit corporations must be sanctioned by the state: they are legal entities registered in particular jurisdictions. No matter how big or small or virtuous or innovative they are, they cannot operate without state approval. In return for this approval, the entity is endowed with rights (e.g., limited liability) and responsibilities (e.g., taxes).

A decentralized autonomous organization (DAO) is just a generic term for a governance model sanctioned by software: code defines conventions for governing the project irrespective of the stance of the state.

• We say a DAO’s governance model must be sanctioned by software, not necessarily controlled by software. The Bisq DAO, for example, is not controlled by software: software merely provides a framework for the people involved with the Bisq project to (collectively) manage the software itself. The Bisq DAO operates on the idea that code is not law. Code is written by humans to provide a service to other humans, so it should be accountable to humans too.

The universe of DAOs is diverse. Just as companies come in many shapes and sizes, and some companies are scammy, fraudulent, or just poorly managed—that’s no reason to assume all companies are the same way. It’s the same with DAOs: some DAOs haven’t worked out so well, but others might turn out differently.