How do DAOs work?

Asked 2 years ago

Hi, I don't know much about DAOs at all. I understand that it's an organization of people that comes together to make the company work. However, I don't understand the structure, how it makes its money, and what motivates the team of people to govern the workings. TIA!

Filip Dimkovski

Filip Dimkovski

Saturday, September 17, 2022

DAOs (decentralized autonomous organizations) work by not having a central authority governing them. If you invest in a crypto project that's managed by a DAO, you automatically become a part of the DAO, meaning that you can vote and contribute on how the project will unfold in the future.

Let's say you invested in Solana. For each SOL token you own, you can contribute one vote regarding an important matter in the project's future. Of course, the team that created the project are almost always a part of the DAO, since they probably own a certain percentage of the total token's issued.

Regarding the DAO's funding, the entire project gets funded every time someone invests in its token.

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