A Decentralized Autonomous Organization (DAO) is a fully democratic organization that runs on software rather than being managed through a traditional hierarchy. In a DAO, members are represented by blockchain addresses that can vote on proposals through token holdings. All rules and operations are encoded in smart contracts rather than legal documents. Proposals can include changes in leadership, hiring vendors, issuing shares, or allocating funds. This allows automated and global organizations to operate without centralized control.

1. What is Decentralized Autonomous
Organization (DAO) & How DAO works?

2. INTRODUCTION
• DAO is the organizations running in the software in a fully democratic way.
• Before we jump into how exactly they work, we need to go through the tradition
organization structure quickly.
• An organization is the group of people working on a common interest.
• This is most of the time is to make money for the shareholders.
• The organization follows certain rules which are governed by the Government of the
place where the organization has been incorporated.
• An organization has the group of shareholders who represent the ownership of the
organization in the percentage format.
• Let’s say a person X own 3000 shares of the organization which has in total 30,000
issued shares then Mr. X will become 10% owner of that organization.
Copyright© BlockchainCouncil 2

3. • These shares can be transferred to anyone which will, in turn, transfer the ownership
of the organization.
• Share holders appoint a Board of Directors who control the major key decision of the
organization.
• This group of people also known as Board of Directors appoints the CEO who
execute the day-to-day operation by hiring more staff under him.
• The rules & regulation of running the organization are written in Bylaws or
Memorandum of Article, Article of Association.
• DAO is just the digital version of the above arrangement where all rules & regulation
are written in the source code rather than the piece of paper.
Copyright© ToshendraSharma 3
Sign Up Now

4. • They are executed by thousands of people/computers together through some
consensus-based algorithm.
• The platform where the DAO runs is called Blockchain.
• The most common case where the DAO can be written is Ethereum Blockchain.
• In Ethereum, they are written in Solidity Language
Copyright© ToshendraSharma 4
Sign Up Now

5. How does DAO work?
• In the DAO, each action or vote is represented by some form of transaction in the
Blockchain.
• Here the members are represented by the address (in Ethereum, It’s Ethereum
address).
• These addresses can be owned by a human, a robot, an IOT device, or even another
DAO.
• This makes it ideal for a fully automated system to run the full-fledged organization.
• Each member is given a token which represents the shares of the DAO; these tokens
can also be used to vote in the DAO to take a certain decision.
• The token is nothing but another kind of contract sunning on top of Blockchain.
Copyright© ToshendraSharma 5
Sign Up Now

6. • The more token an address has, the more control he will have on the DAO.
• Each member will have the rights to submit the proposal to take certain decisions.
These decisions can be:
o Fire the CEO or just Change the CEO
o Hire a vendor to get his/her service
o Hire a lawyer
o Pay certain ethers/USD to someone as a salary or bonus
o Issue the share to someone because that person/address is adding more value.
• In the DAO, since this is nothing but a democracy which is running in the Blockchain
the voting power can be optionally delegated to someone to whom a member trust
more. This is in fact just like voting by proxy in the real organization.
Copyright© ToshendraSharma 6
Sign Up Now

7. • The DAO can also raise fund through some crowd sourced funding by issuing the
tokens/shares to anyone who is paying the money to the DAO.
• This payment and issuing the shares/token can be done in real time unlike the more
than 60 days process in the real organization.
Copyright© ToshendraSharma 7
Sign Up Now

8. OUR CONTACT DETAILS
https://www.blockchain-council.org
training@blockchain-council.org
fb.com/blockchaincouncil
@chaincouncil
WEBSITE:
EMAIL:
THANK YOU FOR YOUR TIME
Copyright© BlockchainCouncil 8
Blockchain CouncilComPany:
Sign Up Now