DAO (Decentralised Autonomous Organisation)

A DAO uses smart contracts to encode governance rules, allowing token holders to vote on decisions such as protocol changes, treasury spending, or partnership approvals. Membership is typically proportional to token holdings, and all votes and treasury transactions are recorded on-chain.

DAOs introduce specific scam and governance-attack vectors: a malicious actor who acquires a majority of governance tokens (a governance attack) can vote to drain the treasury; proposals with deceptive descriptions can pass if the voter base is inattentive; and projects that claim DAO governance but retain developer override keys are using the DAO label as a trust signal without substance.

For consumers investing in DAO governance tokens, checking whether any single wallet controls a dominant voting share, whether there is a time-lock on treasury actions (preventing instant execution of malicious votes), and whether the codebase matches what the governance system actually controls, are essential due-diligence steps.