The DAO (organization).
A decentralized autonomous organization (DAO), sometimes labelled 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. The precise legal status of this type of business organization is unclear.
A well-known example, intended for venture capital funding, was The DAO, which launched with $150 million in crowdfunding in June 2016, and was immediately hacked and drained of US$50 million in cryptocurrency. This hack was reversed in the following weeks, and the money restored, via a hard fork of the Ethereum blockchain. This decentralized bailout was made possible by a majority vote of the blockchain’s hash rate.
Decentralized autonomous organizations have been seen by some as difficult to describe. Decentralized autonomous organizations are typified as the ability of blockchain technology to provide a secure digital ledger to track 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 mutually accepted trusted third party in a financial transaction, thus simplifying the transaction.
The costs of a blockchain-enabled transaction and of the associated data reporting may be substantially offset by the elimination of both the trusted third party and of the need for repetitive recording of contract exchanges in different records: for example, the blockchain data could, in principle and 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.
Daniel Larimer first proposed the concept of a “Decentralized Organized Company” in an article published on September 7, 2013.
Vitalik 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.