5 Terms to Instantly Sound Like a DAO Expert

written by Kevin Owocki

Want to dive into the world of DAOs but feeling overwhelmed by all the jargon? Here are five essential terms that will help you navigate conversations about Decentralized Autonomous Organizations like a pro.

Smart Contracts: Think of these as the beating heart of any DAO. Smart contracts are self-executing programs that automatically enforce agreements between parties without needing intermediaries like lawyers or banks. When someone mentions smart contracts in a DAO context, they’re talking about the coded rules that govern how the organization operates — from voting procedures to treasury management.

Governance: This term refers to how decisions are made within a DAO. Unlike traditional companies with top-down management, DAO governance typically involves members voting on proposals using tokens. When you hear someone discussing “governance mechanisms” or “governance tokens,” they’re talking about the systems and tools that enable democratic decision-making in the organization.

Treasury: Every DAO has a shared bank account called a treasury. This isn’t your typical corporate account — it’s a blockchain-based pool of funds controlled by the DAO’s members through voting. The treasury holds the organization’s assets, whether they’re cryptocurrencies or tokens, and can only be accessed according to the rules established in the DAO’s smart contracts.

Coordination: At its core, a DAO is a new way for people to coordinate and work together across the internet. When people talk about coordination in DAOs, they’re referring to how the organization enables global collaboration without traditional hierarchies. Through smart contracts and shared incentives, DAOs create systems that allow strangers from around the world to trust each other and work together effectively toward common goals.

Permissionless: This term captures a fundamental principle of DAOs — anyone can participate without asking for permission from a central authority. When people describe a DAO as permissionless, they mean that anyone with an internet connection and some tokens can join, vote, and contribute to the organization’s mission, regardless of their location or background.

Understanding these five terms will help you grasp the core concepts that make DAOs unique and participate meaningfully in discussions about this revolutionary form of organization. As the DAO ecosystem continues to evolve, keeping these fundamentals in mind will help you navigate the exciting possibilities they offer for the future of collaboration and governance.

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