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1. Beginner Course

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  1. 1. What are these cryptocurrencies?
  2. 2. Bitcoin - the story of a technological revolution
  3. 3. Satoshi Nakamoto, who is the creator of Bitcoin?
  4. 4. Vitaly Buterin – the creator of Ethereum
  5. 5. What is blockchain, and how does it work?
  6. 6. What is an NFT token?
  7. 7. What is money?
  8. 8. Cryptocurrencies vs fiat money, which will win?
  9. 9. What is DeFi (Decentralized Finance)?
  10. 10. DeFi: opportunities, advantages and disadvantages of decentralized finance
  11. 11. What is an altcoin?
  12. 12. Stablecoins - What are they?
  13. 13. Cryptocurrency wallet - what is it?
  14. 14. Why do we talk about bull and bear markets?
  15. 15. Security in the crypto market - what rules are worth following?
  16. 16. What is the seed phrase in cryptocurrencies?
  17. 17. Dogecoin and memecoin - what are they?
  18. 18. What is a Ponzi scheme?
  19. 19. What is a Soft and Hard Fork?
  20. 20. Blockchain - examples of use
  21. 21. Is blockchain safe?
  22. 22. What are the types of blockchain networks?
  23. 23. What is blockchain network congestion, and how does it work?
  24. 24. Cryptocurrency wallets: Hot Wallet vs. Cold Wallet - key differences!
  25. 25. Cryptocurrency wallet diversification
  26. 26. Halving Bitcoin - what is it, and how does it affect the price?
  27. 27. Blockchain versus databases: key differences!
  28. 28. How do you transfer cryptocurrencies?
  29. 29. The most important cryptocurrency acronyms/slang you need to know!
  30. 30. The memecoin story: madness or great investment?
  31. 31. What is Ethereum? 
  32. 32. Everything you need to know about gas fees in Ethereum!
  33. 33. Gavin Wood: Blockchain Visionary and Co-Founder of Ethereum
  34. 34. Decentralized Apps – what are they?
  35. 35. What is Proof of Work (PoW) and what is Proof of Stake (PoS)?
  36. 36. What is the Proof of Authority (PoA) consensus mechanism?
  37. 37. What is Proof of Burn (PoB)?
  38. 38. What is a whitepaper? What is its purpose, and how do you write it?
  39. 39. Smart Contracts - what are they?
  40. 40. Know your customer (KYC) and Anti-money laundering (AML) what are they in the cryptocurrency industry?
  41. 41. Blockchain and NFT games - how to make money on them?
  42. 42. Liquidity in the cryptocurrency market
  43. 43. Inflation and its effects on financial markets
  44. 44. What is stagflation and why does it have a negative impact on the market?
  45. 45. What are utility tokens and what use do they have in the cryptocurrency sector?
  46. 46. What is cryptocurrency mining?
  47. 47. What is the mining difficulty?
  48. 48. What is compound interest, and how does it work?
  49. 49. What Are Privacy Coins and Are They Legal?
  50. 50. What is CBDC - central bank digital money?
  51. 51. What is Cryptocurrency Airdrop all about?
  52. 52. Key differences between ICO, IEO and STO
  53. 53. What are decentralized DAO organizations, and how do they work? What are DAO tokens?
  54. 54. What is EURT? How does it work?
  55. 55. What is the difference between Circulating Supply and Total Supply?
  56. 56. Snapshot from the world of cryptocurrencies - what is it?
  57. 57. What is the Fear and Greed index for cryptocurrencies?
  58. 58. APR versus APY: what is the difference?
  59. 59. What is an Initial Farming Offer (IFO)?
  60. 60. What is Regenerative Finance (ReFi)?
  61. 61. Who Is Craig Wright, the Alleged Creator of Bitcoin?
  62. 62. What Is Bitcoin (BTC.D) Dominance?
  63. 63. Michael Saylor, Self-Proclaimed Bitcoin Maximalist
  64. 64. Bitcoin Pizza Day
  65. 65. AI blockchain - a new look into the future?
  66. 66. What is WorldCoin? Everything you need to know about this cryptocurrency!
  67. 67. Azuki NFT collection guide: everything you need to know about it!
  68. 68. The 10 most expensive non-fungible tokens (NFTs) ever!
  69. 69. The Bored Ape Yacht Club (BAYC) - the story of the popular NFT collection!
  70. 70. CyberPunks - the story of the most popular NFT collection in the crypto industry!
  71. 71. NFT Art: The digital art revolution - history and examples!
  72. 72. Who is Changpeng Zhao, CEO of Binance?
  73. 73. Who is Brian Armstrong - CEO of Coinbase?
  74. 74. Who is Galy Gensler and the SEC? How does the Securities and Exchange Commission (SEC) affect the cryptocurrency market?
  75. 75. Web3's most popular social media platforms! Will they replace the platforms we know?
  76. 76. What is IoT - the Internet of Things?
  77. 77. On-chain analysis in the cryptocurrency world: Everything you need to know about It
  78. 78. Can you pass on your cryptocurrencies after death? How do you pass on a cryptocurrency inheritance?
  79. 79. What is the Howey test? What application does it have in cryptocurrencies?
  80. 80. The use of blockchain technology in the world of sport
Lesson 53 of 80
In Progress

53. What are decentralized DAO organizations, and how do they work? What are DAO tokens?

DAO tokens, like decentralized autonomous organizations (DAOs), are associated with decentralized finance (DeFi). They enjoy virtually the same interest. However, cryptocurrency and blockchain technology enthusiasts have different opinions on DAOs.

Is DAO the next big thing in the cryptocurrency sector, leading us to a fully decentralized future? It could well be. Let us dig deeper into the topic and answer this important question – what is a decentralized autonomous organization (DAO)?

Decentralized autonomous organization (DAO) – definition

This type of organization operates with a set of rules written down in a code and enforced by a network of computers. To become a member of such an organization, we must first acquire its cryptocurrency. Tokens in DAOs play an significant role. Ownership of such assets gives users the right to vote on proposals or updates to a particular protocol, in proportion to the amount of assets they own.

How does this type of organization work?

It mimics the corporate structure, but its rules and regulations are created using open-source code. The rules are enforced through smart contracts.

Just remember that smart contracts are those contracts that are programmed to perform a certain activity when certain conditions are met. Usually, these conditions are set by the stakeholders of the decentralized autonomous organization.

Importantly, there is no hierarchy in DAO. The organization encourages its networked and dispersed users to achieve a common goal. A key feature of DAO is internal capital. It is used to motivate users and ensure the smooth functioning of the organization.

Interesting fact: After the DAO has established a set of rules and is programmed into smart contracts, the organization enters the funding phase. Anyone who wants to have access to it can participate.

Advantages and benefits of DAO

First and foremost, complete decentralization. Each member of the organization has a fairly equal say in important decisions. However, this depends on the number of tokens they hold. The more coins, the more significant a stakeholder’s vote is. However, voting rights are still dispersed, so power cannot be transferred to one person.

Second, participation. When members of DAO feel that their votes and involvement are treated fairly, they feel a stronger sense of belonging to the project. This prompts them to use their tokens in ways that benefit the organization – by casting their vote or even burning them.

Publicity. There is virtually nothing hidden in DAO. Because they are based on open-source software, the votes cast are publicly visible. This gives every user a sense of responsibility for the community. Therefore, voters do not want to put their reputation on the line.

A final essential advantage of DAOs is the building of an engaged community. Decentralized, autonomous organizations allow people from all over the world to connect with each other and work towards common goals. All that is needed is an internet connection and management tokens. Therefore, there is really a lot of scope for innovative development of DAO, both for the organization and on the part of the members themselves.

Disadvantages of DAO

Decision-making is a time-consuming process. The large number of participants in a particular vote automatically increases the duration.

DAO requires knowledge. Not only about token management, but also about the technology. Decentralized organizations require that you are well versed in the world of new technologies. If you are not familiar with it or do not know what a DAO is, we do not advise you to join the community.

Organizations that are not well protected or do not follow the right security protocols are vulnerable to attack (exploit). This is a serious risk that can even lead to the theft of financial reserves.

DAO projects and tokens worth looking at

Curve DAO

It is a decentralized exchange and market maker (AMM). As a market maker, Curve DAO focuses mainly on stablecoin pairs. This decentralized organization is popular among users for its liquidity management and intuitive platform.

In addition, the platform offers users stable prices for the exchange stables, ERC-20 tokens and other digital assets. In addition, users can deposit their stablecoins in Curve DAO liquidity pools and earn additional profits in the form of transaction fees and rewards.

Lido Finance (LDO)

This is a relatively young project that was launched in 2020. It is one of the most popular solutions for seamless staking of cryptocurrencies based on the Proof-of-Stake consensus. Lido is currently one of the largest DeFi protocols, with a TVL of around US $13.83 billion.

The protocol allows any amount of assets to be staked in the protocol and their tokenised version recovered, which can be used in DeFi protocols to generate passive income.

Uniswap (UNI)

It is a decentralized exchange (DEX) where users can trade crypto assets without intermediaries or complex order books. The protocol was launched on the Ethereum network in 2018. It has revolutionised cryptocurrency trading with a seamless and user-friendly platform. A key feature of the protocol is the automated market maker (AMM) model. It allows anyone to participate, contribute and make money as a liquidity provider. Initially, Uniswap allowed the exchange of tokens based on the ERC-20, but this was later extended to include the BRP-20 standard.

Aave (AAVE)

That is, friendly souls. And basically a decentralized protocol for lending and borrowing without centralised bodies. It offers very different functions, including instant lending, variable interest rates, multichain support or interoperability. Just like other platforms, native token holders manage the platform. They create and vote on proposals concerning Aave itself, the platform’s vault and various updates.

Maker DAO

This is also a decentralized autonomous organization built on the Ethereum blockchain. Users can borrow and generate stablecoin DAI here. How do they do it? By depositing the underlying assets in smart contracts.

The platform is managed by MKR token holders, who determine the direction of MakerDAO. They make decisions on protocol parameters such as platform fees, interest rates or types of security.

DAO tokens – what is their purpose in the structure?

As you have seen from the examples above, there are many types of DAO. The purpose of such platforms depends on the specific needs and objectives. What types of DAOs can be found on the market? Here they are:

  • Protocols,
  • Venture,
  • Media,
  • Entertainment,
  • Grants.

And many others. Well – but what about tokens? Tokens in a DAO structure reflect the long-term vision of a particular protocol. They are useful for creating rewards and incentives for users of a decentralized, autonomous organization. They encourage voting on the direction and development of the DAO. Tokens are the main reason why users engage with the platform and invest in the success of the protocol.

The whole process of allocating and providing DAO tokens itself depends on the goals of the platform and the community itself. In any case, however, there must be a balance between rewarding users and replenishing the Token DAO treasury.


Decentralized autonomous organizations (DAOs) are a key element in the development of decentralized protocols. They foster a sense of belonging and community. At the same time, they bring together users’ interests and encourage active participation in the process.

DAOs have enormous potential. Of course, each project has its own advantages and disadvantages, so you should weigh it carefully before deciding on an autonomous organization. Tokens play a significant role in this structure.

Complete your lesson!

  1. Smart contracts – what are they? [BEGINNER LEVEL]
  2. Liquidity pools in the cryptocurrency market. [BEGINNER LEVEL]
  3. What is Curve Finance? [INTERMEDIATE LEVEL]
  4. What are the decentralised DEX cryptocurrency exchanges? [INTERMEDIATE LEVEL]