DAOs

DAOs play a critical role in many blockchain applications and DeFi protocols. Many of the DeFi protocols we discussed in Chapter 3, Decentralized Finance, rely on DAOs to get the liquidity to jump-start the project and automate governance decisions. In the following sections, we will provide an overview of DAOs, explain how DAOs work, and use the Uniswap DAO to illustrate how the protocol is governed by the leading DeFi protocol.

Introduction to DAOs

Traditionally, an entrepreneur or a group of entrepreneurs spots a market opportunity and forms a corporation to address market needs. Typically, starting a traditional corporation requires you to submit a list of required documents. For example, if you want to start a company in the state of Virginia in the USA, you need to provide the name of the company, a business address, a registered agent, the incorporator’s name and address information, the total number of shares, and an effective start date. You need to specify...