What it is
DAOs operate without central leadership, relying instead on collective decision-making. Members who hold the DAO's governance tokens can propose and vote on various operational aspects, such as treasury management, protocol upgrades, or new initiatives. These votes are recorded on the blockchain, and if a proposal passes, the smart contract automatically executes the changes, ensuring transparency and immutability.
DAOs are a prominent governance model within the decentralized finance (DeFi) and broader crypto ecosystem, particularly on Ethereum. News frequently covers major DAO governance proposals, controversial votes, or the launch of new DAOs. Retail investors can participate in DAOs by acquiring governance tokens, allowing them to influence the direction of projects they support, but they should understand that voting power is often proportional to holdings.
Why it matters
DAOs offer retail investors a way to directly participate in the governance and direction of crypto projects, but influence depends on token holdings.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice