Decentralized Autonomous Organization (DAO) – Explain Like I’m Five

Our bottomless drive for knowledge and improvement is what kept us at the top of the food chain. As technology improves, so does our way of doing things. We live our days and work by cooperating in harmony with everyone, led by officials in the hierarchy.

However, things are about to change because of the discovery of decentralized autonomous organizations. So bear with me as we dive deep and take a peek into the possible future that awaits us.


What is a Decentralized Autonomous Organization?

Dao or decentralized autonomous organization is comparable to other large businesses and organizations like Walmart, Google, and Amazon. The only difference is that DAOs are autonomous, meaning DAOs are independent and capable of operating without the need of a manager or any human intervention.

DOA do not have a leader to guide them, but they share similar interests and goals. They would implement rules and instructions on the smart contract that they would follow. And this is what a truly decentralized organization looks like.


Gone are the days when mediators, brokers, and managers dictated the entire system for the benefit of their own. In fact, humans will not influence DAOs, making them trustworthy and transparent.

However, some critics argue that the unregulated nature of DAO poses unknown risks and may cause more harm than good. It’s difficult to predict and see DAO’s true potential because it’s still in its early stage.

How does it work?

DAO operates by following a series of programs established by the people who designed it. Codes and commands are encoded on smart contracts within an open blockchain like Ethereum, making it a fully automated platform or system that everyone can use.

For a better understanding, consider a traditional fast-food restaurant such as McDonald’s. McDonald’s is managed and run by its employees. Every detail and process in the restaurant is micromanaged. And they run their business by doing all of the work themselves, such as cooking, cleaning, and serving food to their customers.

how dao works?

They also handle orders and deliveries, as well as stock and sales for the week. It’s a time-consuming process that necessitates the coordination of manpower just to function.

In comparison, a DAO works without the need for active managers and employees. So instead of having humans operate it, everything will be fully automated, from cooking to serving piping hot food for its customers.

When the time comes where it needs to restock its ingredients, pay the bills, and collect the money, it will send a command to its server, and the program will come to do all that work.

I know this sounds a bit far-fetched in the real world, but that’s the gist of a decentralized autonomous organization.

Benefits of a DAO

DAOs are community-based organizations with the promise of putting their community first rather than profits. Which is an investment in itself as more people will trust them and be willing to become a part of their community. There are many promising benefits a DAO can offer, and below are the highlights:

dao benefits
1. No government influence

In the United States, organizations are forced to comply with any request that the US government submits. But unlike traditional organizations, the government can’t simply stop a DAO’s operation or command it to release private information about an individual. The only possible way for them to do this is to purchase a large share of the DAO itself, which is highly unlikely.

2. Adaptability

DAOs can be improved and modified to adapt to our society’s constant evolution. And the shareholders, which is also the community that benefits from DAO, can vote on its future development, allowing it to keep up with our fast-paced modern society.

3. Trustworthy

Lastly, and perhaps one of the most important benefits of a DAO is its unique structure that limits unnecessary human intervention, making it secure and less prone to malpractices and corruption from within.

The downsides of DAO

A DAO is open-source which means that it is available to the public and that anyone can access, view, and interact with it. Though this is a good thing because it gives the community transparency and power, it also has some drawbacks.

1. Prone to Online Attacks

DAOs being open-source makes them vulnerable to attacks from hackers. If the hackers are knowledgeable enough to bypass a DAO’s encrypted security program, they can create a code that can tamper with it. And this poses some serious risk for everyone involved with it. At the end of the day, DAOs are only as good as the people who’ve established their codes.

downsides of dao
2. Leaked Business Secrets

Another downside of a DAO being open-source is that business secrets and other advantages they may have against their competitors will no longer be a secret. Since anyone can view how their DAO was set up, the company’s time and effort invested in making innovations for solving problems can just be stolen or taken advantage of by anyone who knows how to read codes and programs.

Examples of DAO

Many decentralized autonomous organizations have been built over the past few years. And according to, there are over 180 DAOs that exist today.

Back then, DAO was just a jargon for cryptocurrencies until it suddenly boomed and amassed almost $10 billion in treasury. To give you a clear idea of what DAOs can be, below are some examples and quick overviews of DAOs.


One of the largest DAO that exist today, with over $2.5 billion invested in it. Through BitDAO’s platform, you can invest in a vast range of Defi projects such as AAVE, Convex Finance, Curve, and the likes.


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RaidGuild is a platform for Web 3.0 marketing and design freelancers. If you’re looking forward to establishing your business on Web 3.0, you’ll need people with the right skill, tools, and expertise to set you up for this upcoming web technology.


Mirror is a platform for writers and bloggers who want to monetize their skills by turning their written content into NFTs.


Are you someone with a burning passion for music? If so, BeetsDAO is a platform worth checking out. It’s where you can collect music-based NFTs and make money off of people’s love for music.


These are just some of the DAOs that operate on the blockchain today. And as you can see, DAOs can be built as a platform dedicated to games, music, digital books, and virtually anything that touches the interest of an audience.

The possible future

Imagine if everything is done autonomously. We could live and enjoy our lives, only doing minimal work, as our autonomous society provides everything for us. Such things are only seen in sci-fi movies, but they may be much closer to reality than we initially thought.

It would completely change our way of life and redefine the essence of work and life balance, allowing us to focus more on our family, friends, and loved ones.

In my opinion, DAOs are the path forward. And I genuinely believe that decentralized autonomous organizations and groups will be the new employers in the near foreseeable future, enabling people from around the world to work remotely at the comfort of their homes. The advancement of our technology will grant us such privileges that we can all embrace.

And if we push it even further, there might come a day where we can finally wake up, do the things we never had the time to do, and make the most out of our short lives. This possibility may be a long shot for us, but hey, if it becomes a reality, it’ll be one helluva ride for all of us!


DAO is a revolutionary technology that will reshape how we work in today’s modern world. A future where everything is managed by AI’s and programs to do tasks for us humans. But is it the future? With DAO’s potential to benefit its community, a lot can also be said about the impending risks it might have for everyone.

Nevertheless, it’s still too early to tell, and we could discover ways to implement DAOs without taking some risks. And when that time comes, we’ll become fully autonomous beings that have complete control of our lives beyond our imagination.

Who knows how far our technological capability will take us? I guess we’ll never know until we cross that bridge, so I’ll leave it up to your imagination.