DAO stands for Decentralized Autonomous Organization. It is an organization which can run on its own without need of centralized parties for taking decisions for its growth and profitability. The main idea behind DAO is to copy functions of business entities without hassles of inefficient bureaucracies associated with the big organizations. This idea came into being soon after Bitcoin’s launch in 2009. Since Bitcoin could do away with the financial middlemen, companies felt that they may be able to run independently without a hierarchy to manage them.
DAO wants to improve governance for modern-day organizations by certain means. Anyone having Internet connectivity would be liable to get DAO tokens. The DAO could also set down rules which they voted upon. So, they will depend on smart contracts and pre-set rules. The smart contracts may be designed to perform many tasks like giving away funds after a date or at the time a specific percentage of voters have agreed on funding a project. The DAO basically stands for ways to cryptographically assure democracy. Here, the stakeholders, for instance, are able to vote on new rules and on changing existing rules.
But it may be challenging to change DAO; while this is beneficial because a single entity cannot change rules, it can be a drawback as developers will not be able to change codes even if a bug is detected.
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