A DAO stands for Decentralized Autonomous Organization. It's a way for people to come together and make decisions about a project or business without the need for a central leader or organization.
Think of a DAO like a virtual company or a club, where instead of having a boss or a CEO in charge, everyone gets to vote on important decisions. The rules and decision-making process are all encoded into smart contracts on the blockchain, so it's fair and transparent. These rules determine how decisions are made and how funds are managed within the organization.
DAOs often use tokens to verify membership and facilitate voting. In some cases, the more tokens one owns, the more voting power one holds.
They can have a variety of purposes, like helping groups collect NFTs, organizing social groups, and helping groups find consensus via decentralized decision-making. While sometimes DAOs have representatives, they make decisions by voting, using a bottom-up rather than a top-down approach to decision-making.