A DAO is an organization governed by rules encoded as smart contracts, rather than by a centralized leadership. Anyone who holds the DAO’s tokens can participate in decision-making, such as voting on proposals, allocating funds, or launching new features. DAOs aim to create fully transparent and democratic systems for managing projects or communities. Famous examples include MakerDAO and ConstitutionDAO. DAOs can revolutionize how communities collaborate, but they are also subject to legal and governance challenges.