Decentralized Autonomous Organization

With the maturity of Smart contracts and Blockchain ecosystem, it is increasingly getting possible to create organisations that can operate all by itself based on specified coded rules, without having to rely on higher management or leadership or hierarchy or head-quarters.

According to the "nexus theory of contracts" a corporation is nothing but a set of contracts among parties (suppliers, customers, directors, shareholders, auditors etc.) Smart contracts and a decentralized network will allow us to to create such organisations very easily.

More about the nexus theory of contract.

A typical Company (a legal entity) can be imagined as relationships among different stakeholders, guided by contract terms, trying to make money for the investors. A DAO has the potential to replace the concept of a centralized company head quarters in to self managed autonomous systems, with the same operating rationale.

Diagram above represents how a company typically interacts. The diagram below is a high level representation of a DAO.