The Governance

DAOs differ in their governance by incorporating automated smart contracts and quasi-democratic decision making. The rules of governance are embedded into smart contracts (i.e., a piece of software that will execute a transaction or an event if the prerequisites defined in the contract are satisfied). DAO members agree “to abide not just by the rule of law, but the rule of code”. This code forms “a cohesive network of hard to change rules that establish the standards and procedures” for DAO participants. This differs from existing corporations “which rely on statutory laws and often written documents to define the metes and bounds of the organization.”