DAO
/dow/ · noun · Startup & VC · Origin: 2016
Definitions
Decentralized autonomous organization — an entity governed by smart contracts and token-holder votes rather than a traditional management structure. Members vote on proposals proportional to their token holdings. The concept was stress-tested early when 'The DAO' was hacked in 2016, leading to Ethereum's controversial hard fork.
In plain English: A company run by code and group votes instead of executives. Token holders vote on decisions, and the rules are enforced automatically by software.
Example: The DAO voted to allocate $2 million to the new protocol upgrade, though only 8% of token holders actually participated in the vote.
Origin Story
The blockchain experiment in corporate governance without corporations
The concept of a **Decentralized Autonomous Organization** was described by Daniel Larimer in 2013 and formalized by Vitalik Buterin in a 2013 Bitcoin Magazine article. The idea: encode an organization's rules in smart contracts so it runs without traditional management.
The most famous early DAO was simply called **The DAO**, launched on Ethereum in April 2016. It raised $150 million in crowdfunded ETH -- the largest crowdfund in history at the time. Then in June 2016, an attacker exploited a reentrancy bug and drained $60 million.
The Ethereum community controversially hard-forked the blockchain to reverse the hack, creating Ethereum (forked) and Ethereum Classic (original chain). Despite this traumatic birth, DAOs proliferated -- by 2023, thousands existed governing DeFi protocols, NFT collections, and grants.
Coined by: Daniel Larimer (concept), Vitalik Buterin (formalization)
Context: Bitcoin Magazine, 2013
Fun fact: The DAO hack exploited a 'reentrancy' bug where the contract sent ETH before updating its balance. The attacker could recursively call the withdraw function. This single bug pattern has caused over $1 billion in losses across DeFi history.