Decentralized Autonomous Organization: Idea, Framework, Opportunities and Challenges

Abstract

Decentralized Autonomous Organizations (DAOs) are an emerging development at the intersection of organizational governance and blockchain-based technology. DAOs are transparent, participant-driven systems that operate without central authority. This study addresses the lack of a unified understanding of DAO architecture and governance in existing research. It presents a structured five-layer framework integrating governance, technology, and operational components. The goal of DAOs is to build autonomous, community-driven organizations on blockchain platforms controlled by smart contracts. By using code rather than conventional authority to ensure trust, these contracts automatically execute predefined rules, eliminating the need for intermediaries. These virtual organizations operate without a central authority and are governed through participant agreement and smart contracts. They use digital tokens to allocate resources and support decision-making. By promoting open and autonomous systems, DAOs have gained attention for their potential to transform multiple sectors. This article examines the benefits of DAOs over traditional organizations, evaluates existing approaches, and presents key concepts, components, and characteristics. This study also emphasizes the growing importance of decentralized governance in modern digital ecosystems.