DAO – Decentralized Autonomous Organization is a group of users or entity that runs and makes decision based on codes (or let’s just say, robots) agreed upon by the shareholders or founders of the entity.
In DAO, there is no leader or manager or CEO who controls what happens in the organization, rather decisions are based on voting; the higher the votes, the more likely that which is decided upon will happen.
For instance, in the crypto world, a DAO may launch millions of token and every token is a vote; so, the person with the highest number of tokens has the highest number of votes. This gives the token a value and a use, enabling the DAO to make changes and improve using smart contract. Also, if there’s any increase in the value of the token as time progresses, this profit is distributed to the shareholders according to the number of token each has.
One of the advantages of DAO is that they are open source, meaning that the codes with which they run with are out there for anyone to see. This makes them quite reliable because any programmer can help the main developer notice and fix any bug at all; at the same time this characteristic can make them vulnerable, being that an attacker could find out how the code run making them very easy to be attacked and hacked into.
Another benefit is that they are safe and trustless as there is no manager or CEO and everything is controlled via codes (even if the developer is not there, it still runs); but then again, as it is an open network, there is no form of business secret.