Published On Jul 21, 2025
Updated On Jul 21, 2025
What Are DAOs? A Deep Dive into Decentralized Autonomous Organizations in 2025

DAOs started as an Ethereum experiment.
Today, they govern over $25 billion in on-chain assets and are shaping how the internet funds infrastructure, rewards contributors, and builds in public.
Today, DAOs govern some of the largest DeFi protocols, allocating billions in grants, bootstrapping public goods, and even shaping regulatory narratives across various jurisdictions.
From multisig groups to fully on-chain treasuries, the DAO landscape has evolved into a structured, multi-layered ecosystem with real-world impact.
They are changing how people organise, govern, and allocate value at scale.
Whether you’re building smart contracts, contributing to governance, or designing new coordination systems, understanding DAOs is now foundational to working in Web3.
This guide provides a comprehensive overview of how DAOs operate, their models, tools, use cases, challenges, and the trends driving their development.
Let’s get started.
What is a DAO?
A DAO, or Decentralised Autonomous Organisation, is a system that enables groups of people to make decisions, manage funds, and govern shared projects without relying on a central authority.
Instead of corporate hierarchies or boardrooms, DAOs operate using smart contracts and transparent on-chain rules.
At the core of every DAO are a few fundamental components:
- Smart Contracts: Self-executing programs on blockchains that define the DAO’s rules, how proposals are made, who can vote, and what happens when a decision passes.
- Governance Tokens: These represent voting power. Holders can vote on decisions or delegate their votes to trusted representatives.
- Treasury: A pool of funds that are usually in ETH, stablecoins, or native tokens controlled by DAO members, used for operations, grants, investments, or incentives.
- Voting Mechanisms: Different models determine how votes are counted and executed, ranging from simple token voting to more complex quadratic or delegated systems.
How DAOs Are Different from Traditional Organisations
Aspect | Traditional Organization | DAO |
---|---|---|
Governance | Centralised (CEO/Board) | Decentralised (token holders or members) |
Legal structure | Registered entities | Often on-chain, with legal wrappers optional |
Operations | Off-chain and private | Transparent and recorded on-chain |
Treasury control | CFO or finance team | Community-governed smart contracts |
Entry barrier | Hiring or invitation only | Permissionless or token-based entry |
This flexibility has led to a wide range of DAO models, each optimised for different goals, from protocol governance and funding public goods to investing, building, or curating.
Let’s explore the main types of DAOs shaping the ecosystem in 2025.
Types of DAOs
DAOs have evolved into a diverse ecosystem of coordination models, each tailored to a specific function, from governing billion-dollar protocols to funding public goods and curating digital culture.
Below are the primary categories shaping the DAO landscape today, along with how they’re used in practice.
Protocol DAOs
They govern core smart contract protocols like upgrades, parameters, treasury, and ecosystem incentives.
For example:
- Uniswap DAO oversees protocol fee switches, cross-chain deployments, and grant funding.
- Aave DAO manages risk parameters, asset listings, and treasury diversification.
- Arbitrum DAO is one of the largest protocols with a treasury of ~$4.5B, actively funding infrastructure and growth via the STIP, LTIPP, and Catalyst programs.
Grant / Impact DAOs
Grant / Impact DAOs allocate funding to builders, researchers, and projects that drive public goods or ecosystem growth.
For example:
- Optimism Collective has distributed over $100M through RetroPGF, rewarding outcomes over promises.
- Gitcoin DAO has supported thousands of projects using quadratic funding rounds and Gitcoin Passport for Sybil resistance.
Investment DAOs
Investment DAOs pool capital from members to invest in startups, NFTs, or on-chain assets.
For example:
- Flamingo DAO is a private NFT-focused collective with high-profile acquisitions (e.g., CryptoPunks, Chromie Squiggles).
- MetaCartel Ventures operates as a legally wrapped, Moloch-based DAO investing in early-stage Web3 startups.
Service DAOs
Service DAOs function like decentralised agencies by offering development, design, governance, or marketing services.
For example:
- Raid Guild operates as a full-stack dev/design collective with project-based compensation.
- Developer DAO runs as a learning and collaboration hub for Web3 devs, with internal projects and partnerships.
- StableLab provides governance consulting and delegate services across protocols.
Collector & NFT DAOs
Collector and NFT DAOs curate, fund, and govern digital culture, art, and community-owned media.
For example:
- Nouns DAO auctions 1 Noun NFT per day and uses the treasury to fund creative and public goods initiatives.
- PleasrDAO acquires culturally significant digital assets, including Snowden’s NFT and the Wu-Tang Clan’s “Once Upon a Time in Shaolin”.
Hybrid and Emerging DAO Models
Many DAOs today don’t fit neatly into one category. They blend elements of multiple types:
- Nouns-like DAOs integrate NFT minting, treasury governance, and public goods funding.
- SubDAOs and working groups allow specialisation within larger DAOs (e.g., Arbitrum’s Security Council, Grants Committee).
- AI-native DAOs are experimenting with agent-led participation, auto-voting, and proposal generation.
To understand how DAOs deliver on that mission, it’s important to look at how they operate day to day, how ideas become proposals, how decisions are made, and how treasuries are managed and executed.
Let’s break down how DAOs work in practice.
How DAOs Work: Governance, Voting, and Treasury
DAOs operate without managers, HR teams, or legal departments, yet they make high-stakes decisions, allocate millions in funding, and evolve complex systems in public.
How?
Through a transparent, rule-based process where code replaces hierarchy, and governance replaces management.
Every decision from protocol upgrades to ecosystem grants flows through a lifecycle of proposal, deliberation, voting, and execution.
Let’s explore the lifecycle of DAO coordination from governance models and voting mechanics to the tools that enable on-chain execution and treasury control.
The DAO Governance Lifecycle
DAOs' decisions follow a deliberate and transparent process.
This governance lifecycle allows communities to propose, debate, approve, and execute actions entirely on-chain or through structured off-chain workflows.
Here are the key stages:
1. Proposal Drafting
Most DAO decisions begin with an idea: funding a new initiative, updating protocol parameters, modifying incentives, or onboarding contributors.
This stage typically involves:
- Initial research and scoping by an individual or working group.
- Community discussion on platforms like Discourse, Commonwealth, or Agora to collect early feedback.
- Optional creation of Request for Comment (RFC) threads or pre-proposal templates that standardise how ideas are shared.
This stage helps shape the proposal’s intent, anticipate objections, and gather alignment before any formal vote.
2. Temperature Check / Signalling
Before moving to a formal vote, many DAOs initiate a non-binding, informal poll, commonly known as a temperature check, to assess community sentiment.
This early step helps:
- Surfaces community support or concerns early.
- Reduces governance fatigue by filtering out weak or unpopular ideas.
- It may occur on platforms like Snapshot, or even via off-chain signalling tools like Discord votes.
While non-binding, these signals often determine whether a proposal moves to a formal vote.
3. Formal Proposal Submission
If early feedback is positive, the idea is formalised into a proposal with:
- Clear objectives, deliverables, and timelines.
- Budget breakdowns, resource requirements, or code diffs (if relevant).
- Execution strategy, such as which contract changes or treasury transactions will occur.
This proposal is then posted to the DAO’s voting platform, such as:
- Snapshot (offchain, gasless)
- Tally (on-chain execution)
- Custom frontends integrated into DAO frameworks like Aragon OSx or Nouns Builder
Most DAOs require specific formats, eligibility criteria, and a minimum submission window before voting begins.
4. Voting
Once live, the proposal enters a defined voting window, usually between 3 to 7 days, though some DAOs allow longer periods for complex decisions.
Participants can vote directly or delegate their tokens to trusted representatives. Voting models vary by DAO and may include:
- 1 token = 1 vote (simple token voting)
- Quadratic voting (to reduce whale dominance)
- Weighted or reputation-based voting (based on non-token contributions)
Quorum thresholds and majority rules are often embedded in the DAO’s smart contracts or outlined in governance docs.
5. Execution
If a proposal passes:
- Onchain DAOs execute the proposal automatically via smart contracts. For example, a passed proposal might trigger a treasury transfer or contract upgrade.
- Offchain DAOs (or hybrid models) require execution by a multisig wallet, typically governed by trusted signers or council members.
Some DAOs use Zodiac modules to create conditions like time delays, oracle verification, or veto periods before execution occurs.
As tooling improves, this lifecycle is becoming more composable and automated with integrations across governance UIs, proposal templates, reputation systems, and even AI-powered assistants.
But the DAO governance lifecycle is about creating clear, accountable, and decentralised decision-making processes, i.e. one proposal at a time.
Let’s see different types of governance models.
Governance Models in 2025
The ecosystem has evolved beyond simple token-based voting. DAOs today experiment with models to balance efficiency, decentralisation, and expertise.
Model | Description |
---|---|
Token Voting | 1 token = 1 vote. Simple, but favours whales. |
Delegated Governance | Token holders delegate votes to active representatives (e.g. Uniswap, Arbitrum). |
Quadratic Voting | Reduces whale dominance by making each additional vote costlier. |
Reputation-Based Voting | Weight based on past contributions or off-chain reputation (e.g. Gitcoin Passport). |
Multisig or Council | Small group handles quick decisions, often with community oversight. |
Hybrid models are increasingly common, combining token votes with subDAO councils, off-chain deliberation, and automated execution.
DAO Voting Tools in 2025
DAO participation now runs on a diverse, composable stack:
- Snapshot: Off-chain voting with on-chain token validation. Still widely used, but limited to signalling.
- Tally: Onchain governance interface for Ethereum DAOs (widely adopted by DeFi protocols).
- Agora: Real-time proposal tracking, delegate dashboards, and AI-native workflows.
- JokeDAO: Community-driven idea sourcing and ranked-choice voting.
- Otterspace: Onchain reputation badges for non-token-based voting.
Many DAOs combine these tools with discourse forums, delegate platforms, and real-time analytics to streamline governance.
Treasury Management and Execution
DAOs today manage treasuries ranging from a few thousand to several billion dollars. Treasury operations include:
- Gnosis Safe: Multisig wallets with module support for automated or condition-based execution.
- Zodiac Modules: Extend DAO execution logic, e.g., time-locks, guards, oracle-triggered transactions.
The focus today has shifted toward programmable, modular treasuries with layered security, conditional flows, and DAO-native finance rails.
To understand how DAOs function reliably and transparently at scale, we need to explore the tech stack powering them from smart contract frameworks and identity layers to voting systems and execution modules.
The Tech Stack Behind DAOs
A DAO is only as effective as the infrastructure it runs on. Today, the DAO tech stack has matured into a modular, composable, and multi-chain system, enabling organisations to operate at scale with security, transparency, and flexibility.
From smart contracts and frontends to reputation badges and automation layers, let’s break down the foundational components powering DAOs today.
Base Layer: Smart Contract Platforms
Most DAOs operate on Ethereum and its Layer 2 ecosystems, which offer cost-effective, secure execution. The choice of base layer affects speed, tooling, and composability.
Popular DAO deployment environments in 2025:
- Ethereum Mainnet: High security, widely used for high-value treasuries.
- Arbitrum One & Nova: Scalable DAO ops; Arbitrum DAO is one of the largest.
- Optimism: Known for retro funding and impact-based coordination.
- Base: Developer-friendly infra with DAO-native apps gaining traction.
- Starknet: ZK-based with increasing DAO experimentation.
- Polygon CDK chains and Cosmos DAOs (e.g. DAODAO on Juno) are emerging.
Cross-chain coordination has improved via LayerZero, Axelar, and Wormhole, but security and execution finality remain non-trivial for multi-chain DAOs.
DAO Frameworks and Builders
Frameworks let you launch and manage DAO logic without reinventing governance from scratch.
Key players today:
Tool / Framework | Highlights |
---|---|
Aragon OSx | Modular DAO plugins with fine-grained roles and permissions |
DAOhaus v3 | Moloch-based with frontends, subDAOs, and summoning rituals |
Nouns Builder | Full-stack governance for Nouns-style auctions and proposals |
Juicebox | DAO-native funding with token issuance, revenue splits, and withdrawal conditions |
Modular DAO SDKs | Open-source libraries (e.g. Union, Origami) that allow roll-your-own governance models |
Many DAOs are also moving toward custom deployments with tailored permissions, execution logic, and governance upgrades, instead of relying on rigid frameworks.
Identity, Reputation & Credentialing Layers
There is a rise in non-token-based authority mechanisms. These tools help DAOs assign roles, reduce Sybil attacks, and reward meaningful participation.
- Otterspace: Onchain badges for contributions, roles, and milestones.
- Gitcoin Passport: Aggregated identity scoring across multiple wallets.
- Sismo: ZK-based reputation proofs and selective disclosure.
- Guild.xyz: Role and access control based on wallet activity or credentials.
These systems are increasingly being embedded into governance weight, working group permissions, and bounty access.
Proposal & Voting Interfaces
Building blocks for community participation:
- Snapshot: Lightweight voting, still dominant for signalling.
- Tally: Onchain proposal lifecycle, used by Uniswap, Aave, and others.
- Agora: Delegate-focused governance UI with real-time analytics.
- Pairwise: Improves vote quality through ranked comparisons.
- JokeDAO: Sourcing ideas and feedback in a bottom-up format.
DAOs often plug these into Discourse, Commonwealth, or CharmVerse for longer discussions and contributor coordination.
Automation, Execution & Treasury Ops
One of the fastest-growing areas in DAO infrastructure is automation, cutting down on human intervention for proposals, payments, and upgrades.
- TriggerX: Cross-chain job scheduling, on-chain task automation with shared security.
- Gnosis Safe + Zodiac: Modular treasury control with automation guards.
Automation is what enables DAOs to scale operations without centralised teams.
Analytics & Onchain Governance Dashboards
Observability is key. DAOs today use advanced dashboards to understand treasury flows, voter behaviour, and proposal impact.
- Karma: Delegate activity dashboards and reputation tracking.
- DeepDAO: High-level DAO stats, token holdings, and member activity.
- Dune Analytics: Custom dashboards for governance metrics and treasury analysis.
As DAOs grow in size and complexity, they still face deep challenges ranging from voter apathy and execution delays to regulatory uncertainty and governance capture.
Let’s look at the key hurdles DAOs continue to navigate.
Challenges Facing DAOs in 2025
Despite their growing maturity and adoption, DAOs are still far from perfect.
The freedom and programmability that make DAOs powerful also introduce coordination bottlenecks, governance risks, and execution hurdles.
Here are the most pressing challenges DAOs continue to face.
Voter Apathy and Participation Gaps
One of the most persistent problems in DAO governance is low participation:
- Many token holders never vote.
- Decision-making power is concentrated in a few active wallets or delegates.
- Proposals pass with little scrutiny or debate.
Even with delegation and incentive programs, turnout rates often remain below 10%, especially outside of marquee decisions. This weakens legitimacy and opens the door to governance capture.
Solutions in development:
- Reputation systems that weigh votes based on contribution history.
- Delegate compensation frameworks tied to performance.
- AI-based summarisation tools to improve proposal accessibility.
Sybil Resistance and Identity Verification
DAOs aim to be open, but that openness invites manipulation:
- Fake identities and wallets can sway quadratic or passport-weighted votes.
- Community airdrops or retro funding programs risk being farmed by bots or coordinated groups.
Even in 2025, there’s no universal Sybil-resistant identity. DAOs rely on:
- Gitcoin Passport and social graph heuristics
- Onchain credential systems (e.g., Sismo, Otterspace)
- Reputation-based gating
But trade-offs between privacy, inclusion, and security are still unresolved.
Treasury Inefficiency and Execution Delays
While many DAOs control massive treasuries, efficient capital allocation remains a challenge:
- Grant programs often suffer from poor follow-up and unclear impact.
- Lack of operational staff slows proposal execution.
- Legal ambiguity restricts off-chain payment flows or service contracts.
Efforts like Karpatkey, Llama, and Safe modules are addressing treasury management, but automating compliance and accountability is still a work in progress.
Governance Capture and Lack of Context
Many governance participants are:
- Token whales voting in self-interest
- Delegates overstretched across too many DAOs
- Contributors lacking the context to evaluate complex proposals
This creates situations where decisions pass with unintended consequences or centralising effects. Protocols like Optimism and Arbitrum are trying to rebalance power through:
- Dual-house systems (e.g., Citizens + Token House)
- Delegate reporting standards
- Public dashboards for transparency
But the gap between informed contributors and passive token holders is still wide.
Regulatory Uncertainty
As DAOs gain traction, legal and jurisdictional challenges have intensified:
- Many DAOs have no legal entity, creating liability for core contributors.
- Treasury activities could trigger tax, compliance, or KYC obligations.
- Governments globally are debating DAO recognition (e.g., Wyoming DAO LLC, EU MiCA rules).
While legal wrappers (e.g., Otoco, Syndicate, Tally Legal) offer protection, the regulatory surface area is expanding, especially around payments, data privacy, and capital formation.
Scaling Coordination Without Centralisation
The biggest paradox DAOs face is this:
How do you scale governance without creating another version of centralised leadership?
Working groups, subDAOs, and contributor guilds offer more scalable models. But they also require:
- Clear mandates
- Reliable funding flows
- Checks and balances to prevent siloed decision-making
DAO tooling is improving, but human coordination remains the hardest part of decentralisation.
DAOs today are powerful, adaptable, and more impactful than ever, but they’re still evolving. The next wave of innovation lies not just in better tooling but in smarter governance design: systems that are inclusive, efficient, and resilient.
Let’s look at the emerging trends shaping the next generation of DAOs.
Trends to Watch: The Future of DAOs
DAOs are entering a new phase, which is more scalable, autonomous, and interconnected than ever before.
We’ve explored this in depth in our blog “How DAOs Are Changing the Future of Organisations”, where we break down how DAOs are redefining ownership, governance, and value creation in the digital era.
These trends point to a future where DAOs serve as the core coordination layer for decentralised ecosystems.
Why DAOs Matter and What Comes Next
The internet was built to connect people. DAOs are showing us how to organise them without centralised platforms, corporate intermediaries, or borders.
In a world driven by digital economies and global collaboration, DAOs offer a new kind of institutional infrastructure. One where:
- Anyone can propose, contribute, or earn, based on transparent rules.
- Ownership is distributed, not locked behind cap tables or hierarchies.
- Decisions are programmable, enforced by smart contracts and visible to all.