What Is a DAO and Should You Join One?

DAOs are internet-native organizations governed by smart contracts and token holders. They coordinate capital and decisions without traditional corporate structure.

How DAOs Work

Members hold governance tokens that grant voting rights. Proposals are submitted on-chain; token holders vote. If a proposal passes (by defined quorum and majority), the smart contract executes it automatically. Treasury management, protocol upgrades, and strategic decisions are all handled through governance.

• Permissionless: Anyone can buy tokens and participate
• Transparent: All proposals, votes, and treasury movements are on-chain
• Automated execution: Smart contracts enforce decisions without intermediaries

Types of DAOs

• Protocol DAOs: Govern DeFi protocols (Uniswap, Aave, MakerDAO). Vote on fee structures, asset listings, risk parameters
• Investment DAOs: Pool capital for investments (The LAO, MetaCartel Ventures)
• Social DAOs: Communities with shared interests and membership tokens (Friends With Benefits)
• Service DAOs: Freelancer collectives offering services (RaidGuild, DAOhaus)
• Collector DAOs: Pool funds to acquire NFTs or other assets (PleasrDAO, FlamingoDAO)

Risks

• Governance attacks: Large token holders can dominate votes
• Smart contract risk: Treasury contracts can be exploited
• Voter apathy: Low participation leads to decisions by a small minority
• Regulatory uncertainty: Legal status of DAOs varies by jurisdiction

Should You Join?

If you hold tokens in a protocol, you're likely already part of a DAO. Actively participating—voting, creating proposals, contributing—can influence the protocol's direction and sometimes earn rewards. Start by joining governance forums (Snapshot, Tally) and reading existing proposals before voting.