The Legal Nature of Decentralized Autonomous Organizations (DAOs)

                                                                                                          Dr. M. Fatih Cengil*

Decentralized Autonomous Organization (DAO) is an organization that is coded through smart contracts, capable of performing various activities while it does not have a governance mechanism. DAOs have got certain rules based on codes. Bitcoin is considered the first DAO, however, DAOs have gained their current form based on the Ethereum blockchain. Thus, DAOs can perform various functions through smart contracts.

There is a funding process in the preparation of DAOs. Investors become part of the organization by buying tokens of DAOs. They are able to shape this organisation in accordance with the code. Indeed, buying those tokens, investors enjoy the right to vote in the decisions that will be made according to the established rules of DAOs. Finally, they aim to get a share of profits as a result of the activities in the DAOs.

In this study, the main characteristics of DAOs are provided to the extent that allows to understand the nature of DAOs. It will then be followed by the analyses regarding the legal nature of DAOs.

For the full text of this post in Turkish, please click here.

Keywords: Blockchain, DAO, Ethereum, smart contracts, organization.

* Çukurova University School of Law, Department of Commercial Law.