A Decentralized Autonomous Organization (DAO) is software that runs on the blockchain and provides users with a built-in model for collectively managing their code.

DAOs are distinct from institutions governed by boards, committees, and executives. DAOs are not governed by a limited group, but rather by a network of computers running shared software enforcing a set of rules written in code.

To become a member of the DAO, users first need to join the DAO by purchasing its cryptocurrency. Users holding that asset then have the power to vote on proposals and updates, typically in proportion to the amount they hold.

The first successful example of a DAO was BitShares, a virtual e-commerce platform that connected merchants and customers without a central authority. At the time, Bitshares was labeled a decentralized autonomous company (DAC), a term coined by its founder Dan Larimer.

It is worth noting that the first DAO created on the Ethereum blockchain, called The DAO, was controversial after hackers discovered vulnerabilities in the code.