What Is a DAO? How Decentralized Autonomous Organizations Work, Their Benefits, and How to Join

A DAO is a Decentralized Autonomous Organization — a new type of organization with no CEO or central manager, where all participants vote to make decisions. Rules are encoded in smart contracts on the blockchain, and the organization operates automatically based on voting results. This article explains everything from how DAOs work to how you can participate, in a beginner-friendly way.

What you'll learn in this article

• The definition of a DAO and how it differs from a traditional corporation
• How smart contracts and governance voting power DAO operations
• Key features of major DAOs like MakerDAO, Uniswap, and Aave
• How to join a DAO and acquire governance tokens

DAO stands for "Decentralized Autonomous Organization." Unlike traditional organizations where a CEO or board of directors makes decisions, a DAO allows all members holding governance tokens (tokens that grant voting rights) to participate in management on equal footing.

Three Key Characteristics of DAOs

DAOs have three important characteristics:

• No central authority: There is no CEO or executive team. Operations are governed by rules written in smart contracts. Since power is not concentrated in any single individual, arbitrary governance is structurally difficult
• High transparency: All transaction histories, voting results, and fund flows are recorded on the blockchain, allowing anyone to verify the organization's operations
• Global participation: Regardless of age, nationality, or gender, anyone holding governance tokens can participate in governance from anywhere in the world. No job interviews or entrance exams required

Why DAOs Are Gaining Attention

DAOs have gained prominence alongside the rapid growth of DeFi (Decentralized Finance). According to DeFi Llama data, the total value locked (TVL) across DeFi protocols exceeded approximately $100 billion as of March 2026, with many of these protocols operating as DAOs.

Additionally, Snapshot data shows that the number of DAOs grew from approximately 700 in May 2021 to around 75,000 by December 2024 — a more than 100x increase. DAOs are emerging not only in the crypto industry but also in real estate, media, social impact, and many other sectors.

DAO operations are built on two pillars: automatic execution through smart contracts and decision-making through governance voting. Because rules are executed without human intervention, fraud and arbitrary governance are structurally difficult.

Automated Operations via Smart Contracts

DAO operating rules are written in smart contracts deployed on blockchains such as Ethereum. A smart contract is a program that automatically executes when predetermined conditions are met.

For example, a rule like "if a majority votes in favor, automatically transfer funds to the proposed project" can be defined in code. Since the code is published on the blockchain, anyone can verify the rules.

The Governance Voting Process

Decision-making in a DAO follows these four steps:

1. Proposal: A member submits an improvement proposal or funding request to the forum
2. Discussion: The community discusses the proposal (via Discord, Discourse forums, etc.)
3. Voting: Members cast votes proportional to their governance token holdings on platforms like Snapshot or Tally
4. Execution: If the vote passes, the smart contract automatically executes the proposal

MakerDAO alone had over 200 governance proposals put to vote in 2025, with important decisions about collateral ratios and fees being made on a daily basis.

Treasury (Shared Fund)

DAOs maintain their own treasury. Revenue from protocol fees and token sales accumulates in the treasury, and all spending decisions are made through governance voting. Uniswap DAO's treasury has reached billions of dollars in scale and is used for development grants and ecosystem support.

DAOs and traditional corporations differ fundamentally in how decisions are made and how people participate. Let's compare the differences in the table below.

In a corporation, the CEO and board make decisions top-down, while in a DAO, all token holders participate equally through voting. However, DAOs face the challenge of incomplete legal frameworks — as of 2026, only a few jurisdictions (such as the state of Wyoming in the US) have begun developing legal structures for DAOs.

Tens of thousands of DAOs exist in the crypto world, but here are three particularly important ones. Each manages funds worth tens of billions of dollars.

MakerDAO — The DAO Behind the DAI Stablecoin

MakerDAO is the DAO that issues and manages DAI, a stablecoin pegged to the US dollar. Users can generate DAI by depositing crypto assets like ETH as collateral. MKR token holders vote on critical parameters such as collateral ratios and stability fees. DAI's circulating supply exceeded approximately $5 billion as of March 2026.

Uniswap — The World's Largest Decentralized Exchange

Uniswap is a decentralized exchange (DEX) that enables token swaps without a central authority. Using an AMM (Automated Market Maker) mechanism, users can exchange tokens 24/7 through liquidity pools. As of January 2026, Uniswap's 30-day trading volume reached approximately $47 billion. UNI token holders can vote on fee distribution and protocol upgrades.

Aave — Decentralized Lending Protocol

Aave is a protocol that enables crypto lending and borrowing without intermediaries. Users can earn interest on deposited assets or borrow assets by providing collateral. Aave V3 supports more than 10 blockchains, enabling cross-chain lending. It is also known for flash loans — an innovative feature where borrowing and repayment are completed within a single transaction.

DAO Examples from Japan

DAOs are gaining traction not only in overseas DeFi but also in Japan. RooptDAO, supported by Gaiax Inc., operates as a DAO-style share house and achieved 1.7x revenue growth in its first year. Ninja DAO, one of Japan's largest NFT communities, created the NFT project "CryptoNinja Partners."

Participating in a DAO offers several advantages not found in traditional organizations. Transparency and ease of participation are among a DAO's greatest strengths.

• Democratic decision-making: All token holders can participate in governance without being influenced by any single authority. Every process from proposal to voting to execution is recorded on-chain
• High transparency: All transaction histories and voting results are recorded on the blockchain, making fraud structurally difficult. Treasury balances and fund usage are visible to anyone
• Global participation: Anyone with an internet connection can participate from anywhere in the world. No entrance exams or interviews needed — just purchase tokens to get involved
• Aligned incentives: Since the organization's growth increases token value, all members' interests are aligned. Token rewards are also designed based on contribution levels
• Efficient fundraising: Fundraising through token sales and protocol fees is possible — a new model that doesn't depend on traditional VCs or bank loans

While DAOs offer many benefits, there are also important risks and disadvantages to understand before participating.

Slow Decision-Making

Since all important matters require governance voting, quick decisions can be difficult. The process from proposal submission to voting deadline typically takes one to two weeks, creating risks of delayed responses in emergencies.

Low Voter Turnout and Power Concentration

In many DAOs, only 5–10% of members actually participate in voting. As a result, whales (large token holders) tend to have outsized influence. "Governance attacks" — where someone acquires large amounts of tokens to manipulate votes — have also been reported.

Smart Contract Vulnerabilities

If a DAO's code contains bugs or design flaws, large-scale fund losses can occur. In 2016, "The DAO Incident" resulted in approximately 3.6 million ETH (worth about ¥6.5 billion at the time) being drained through a hack, leading to a hard fork (blockchain split) of Ethereum. It is essential to verify the status of security audits before participating.

Unclear Legal Status

As of 2026, the legal status of DAOs is not clearly defined in most countries. While Wyoming (US) and the Republic of the Marshall Islands have made progress in developing legal frameworks for DAOs, many countries including Japan have yet to establish regulations. There are also growing moves by regulators to strengthen oversight of DAOs and governance tokens, so regulatory risk should be monitored.

⚠️ Participating in crypto assets and DAOs involves risk. Only invest with surplus funds, gather sufficient information, and make decisions at your own responsibility.

Here are the specific steps to join a DAO. Even without programming knowledge, anyone can participate in DAO governance by following these steps.

Step 1: Open an Account at a Crypto Exchange

To join a DAO, you first need to acquire governance tokens. Open an account at a crypto exchange such as OKJ (OKCoinJapan) and complete identity verification. Account opening is free and can be completed as quickly as the same day.

Step 2: Purchase Governance Tokens

Purchase the governance tokens of the DAO you want to join. Some tokens like UNI and AAVE are available on OKJ, but in many cases the following steps are required:

1. Purchase ETH (Ethereum) on OKJ
2. Transfer ETH to a wallet like MetaMask
3. Swap for governance tokens on a decentralized exchange like Uniswap

Step 3: Join the Community and Follow Discussions

Most DAOs run Discord servers or Discourse forums. After purchasing tokens, join the community through the official website and check ongoing proposals and discussions. Even just reading discussions is a good way to understand the DAO's operations.

Step 4: Vote on Snapshot or Tally

Connect your wallet on governance platforms like Snapshot or Tally to cast votes proportional to your token holdings. Many DAOs use Snapshot for off-chain voting (no gas fees required), making it easy to participate.

Getting Tokens Through Airdrops

Governance tokens can also be obtained through airdrops (free distributions). In 2020, Uniswap airdropped 400 UNI (worth tens of thousands of yen at the time) to past users of the service.

To become eligible for airdrops, early protocol usage, testnet participation, and community contributions are effective strategies. See our related guide on airdrops for more details.

Q. Do I need programming knowledge to join a DAO?

No, you can join a DAO without programming knowledge. Simply purchase governance tokens and connect your wallet to participate in voting and discussions. However, having basic knowledge of smart contracts and blockchain will help you understand proposals more deeply.

Q. What is the biggest difference between a DAO and a corporation?

The biggest difference is the decision-making structure. In a corporation, business decisions are made by the board of directors or at shareholders' meetings. In a DAO, all governance token holders directly participate in decision-making through voting. Additionally, since DAOs operate on the blockchain, all financial information and voting results are publicly available — a major distinction from traditional companies.

Q. Will DAO governance tokens increase in value?

Governance token prices are influenced by the usage of the protocol the DAO manages and overall market trends. There are examples like Uniswap (UNI) and Aave (AAVE) where token prices rose alongside protocol growth, but there is always a risk of price decline as well. Investment decisions should be made at your own responsibility.

Q. Where can I get information about DAOs?

Each DAO's official website, Discord server, and Discourse forum are primary information sources. For cross-cutting research, DeepDAO (DAO statistics), Snapshot (voting platform), and DeFi Llama (TVL data) are useful resources. For Japanese-language information, CoinDesk JAPAN is a helpful reference.

Q. Can I start a DAO in Japan?

Technically it is possible, but as of 2026, Japan does not have a dedicated legal framework for DAOs, so legal status requires careful attention. In practice, many DAOs operate under existing corporate structures such as stock companies (kabushiki kaisha) or limited liability companies (godo kaisha). There are also examples like Gaiax Inc. that operate DAOs under a traditional corporate entity.

If you want to purchase DAO governance tokens, start by opening an account at a domestic exchange. With OKJ (OKCoinJapan), you can receive 1,000 yen worth of Bitcoin for free by opening an account and completing identity verification within one month.

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A DAO is a new organizational model that achieves highly transparent decision-making through smart contracts and governance tokens, without any central authority. Major DAOs like MakerDAO, Uniswap, and Aave are actively managing funds worth tens of billions of dollars, and as of 2024, approximately 75,000 DAOs exist worldwide.

Anyone can participate in DAO governance through purchasing governance tokens or receiving airdrops, but there are also risks to understand, including smart contract vulnerabilities and unclear legal status. Why not start by joining the community of a DAO that interests you and reading through the discussions?

Related guides: What Is DeFi | What Is a DEX | What Is an NFT | What Is Web3 | What Is Staking | What Is Solana | What Are Altcoins

Reference sources:

• Ethereum Foundation — What Is a DAO
• DeepDAO — DAO Statistics
• Snapshot — Governance Voting Platform