NFTs, DAOs & Web3

How does a DAO work?

A DAO works by encoding its rules and decision process in smart contracts, so that proposals are submitted, voted on, and executed on-chain without a central authority. Members usually hold governance tokens that grant voting weight, often proportional to the number of tokens held. When a proposal passes the required threshold, the contract carries out the action automatically, such as releasing funds from a shared treasury. For example, members might vote to fund a project, and approval triggers the transfer directly through code, with every step recorded publicly.