What are the key features of a decentralized autonomous organization?

The DAO constitution may also include other provisions, such as: Membership requirements: Who is eligible to join the DAO? What are the requirements for membership? Voting rights: How are voting rights allocated to members? Treasury management: How will the DAO's treasury be managed? Exit mechanism: How can members leave the DAO?

Yield Guild Games provides a great example. In early 2021 the team clearly understood the challenges faced by NFT's and DeFi. They required value add to upcoming virtual worlds. So, by focusing on developing the content and economy of these games whilst simultaneously working to create value in the virtual environment for competitive gamers, artists and content creators, Yield Guild Games created a DAO with clear long term value alignment between all stakeholders. What we can take away from this example is the need for a clear understanding of what challenges need to be addressed, how the long term value accrues and how to align incentives with stakeholders. This provides the foundation for a DAO's purpose and vision.

This is key???as being able to hold a token that represents membership in the organisation aligns your interests. Usually the better a DAO does the better the token performs. And since DAO's are run by it's members then it's down to members to increase it's value.

Depending on the initial design, the governance structure of a DAO can evolve over time. Direct democracy - everyone is equal. Usually, one token represents one vote. There’s a required minimum level of participation. Liquid democracy - participants can either directly vote on proposals or pass their vote to a representative. Generally, representatives are trusted parties elected by the DAO. Delegated democracy - an indirect democracy model using delegate programs. Token holders select representatives to vote on their behalf. They can claim their voting power at any time. Holacracy - helocratic DAOs make collaborative decisions but with a leadership and decentralized authority structure.

One challenge for DAOs not highlighted is participation. It's one thing getting people to join a DAO, it's another thing to keep them engaged and contributing over a long period of time. No matter how big a DAO is, if their members do not actively contribute then it is likely to fail.

DAOs bring innovation but often require a legal wrapper to ensure legal recognition, protection, and compliance with existing legal systems.