This glossary provides definitions of key terms related to Decentralized Autonomous Organizations (DAOs).

A

  • Access Control:
    • The mechanisms used to determine who has permission to perform specific actions within a DAO, such as voting or accessing treasury funds.
  • Address (Blockchain):
    • A unique identifier on a blockchain network, used to send and receive digital assets.

B

  • Blockchain:
    • A distributed and immutable ledger that records transactions and data across a network of computers.

C

  • Community Governance:
    • A decision-making process where the community of DAO members collectively determines the organization’s direction.
  • Contract Call:
    • A contract call is an action that interacts with a smart contract on the blockchain, executing a specific function defined in its code. Calls can be triggered by a wallet (EOA) or by another smart contract.
  • Consensus Mechanism:
    • The method by which a blockchain network validates transactions and reaches agreement on the current state of the ledger.

D

  • DAO (Decentralized Autonomous Organization):
    • An organization run by rules encoded as smart contracts on a blockchain, eliminating the need for traditional hierarchical management.
  • Decentralized Governance:
    • A system of governance where decision-making power is distributed among a network of participants, rather than concentrated in a central authority.
  • Delegation:
    • The process by which a DAO member assigns their voting power to another member or entity. This allows for more efficient governance and representation.
  • DeFi (Decentralized Finance):
    • Financial applications and services built on blockchain technology.
  • Deployment:
    • The process of publishing and launching a smart contract on a blockchain network. Once deployed, the contract becomes available for interaction by users or other contracts.

E

  • Legal Wrapper:

    • A mechanism through which a DAO adopts a recognized legal entity (such as an LLC, foundation, or cooperative) to operate within traditional legal frameworks. This enables actions like signing contracts, managing taxes, or establishing legal accountability.

  • Exploit:

    • An exploit is the deliberate use of a vulnerability in a smart contract or blockchain protocol. It can enable undesired actions like fund theft, vote manipulation, or abuse of internal functions.

F

  • Fork:
    • A process where a community or team splits the source code or governance system of a protocol into two separate paths. In DAOs, a governance fork happens when a group of members creates a new organization with different rules or priorities. Forks can be technical (e.g., codebase splits) or governance-related (e.g., social or ideological divisions).

G

  • Gas Fees:
    • Transaction fees paid to miners or validators on a blockchain network, typically used to compensate for the computational effort required to process transactions.
  • Governance:
    • The rules and processes that determine how a DAO makes decisions and operates.

H

  • Hardware Wallet:
    • A physical device that securely stores private keys offline, protecting them from malware and online attacks. Used to sign transactions while keeping the keys isolated from internet-connected environments. Hardware wallets provide an extra layer of security compared to online or mobile wallets.

I

  • Interoperability:
    • The ability of different blockchain networks and DAOs to communicate and interact with each other.

L

  • Layer 2:

    • Scaling solutions built on top of a base blockchain (like Ethereum) that enable faster and cheaper transactions. Layer 2 systems process operations off-chain and settle results back on the main network. Common examples include Arbitrum, Optimism, and zkSync.

  • Liquidity Mining:

    • A DeFi strategy where users provide liquidity to a protocol (such as an AMM or lending platform) and receive governance or native tokens as rewards, in addition to any standard transaction fees. It is a specific form of yield farming focused on protocol-issued incentives.

  • Liquidity Provisioning:

    • The act of depositing tokens into a decentralized protocol (such as a DEX or lending market) to enable trading or borrowing. Liquidity provisioning alone may earn passive rewards like swap fees, but not necessarily governance tokens.

M

  • Mainnet:
    • The public, fully operational blockchain network where transactions carry real economic value. It’s the “live” environment for deploying smart contracts and managing digital assets.

O

  • On-Chain Governance:
    • Governance processes that are conducted directly on a blockchain, using smart contracts to automate voting and execution.
  • Off-Chain Governance:
    • Governance processes that occur outside of the blockchain, such as discussions on forums or social media, before on-chain votes.

P

  • Proposal:
    • A formal suggestion or plan submitted to a DAO for consideration by its members.

R

  • Rage Quit:

    • A mechanism typical of Moloch-style DAOs that allows members to exit the DAO and withdraw their proportional share of assets if they disagree with a proposal — before it’s executed.

  • Reputation System:

    • A mechanism for tracking and evaluating the contributions and behavior of DAO members, often used to incentivize participation and good governance.

  • Rug Pull:

    • A rug pull is a type of exit scam in which a project’s developers or key actors abruptly withdraw liquidity or funds from a treasury, smart contract, or protocol—often leaving investors with worthless assets. Rug pulls are common in poorly audited or anonymous projects, especially in DeFi.

S

  • Seed Phrase:

    • A set of words, usually 12 or 24, used to recover access to a crypto wallet. It’s a human-readable representation of the master private key. It must be stored securely and never shared. Anyone with access to the seed phrase can control all assets in the wallet.

  • Slashing:

    • A mechanism used to penalize validators, delegates, or other protocol participants for malicious or negligent behavior. Slashing results in the partial or total loss of staked tokens. Common in Proof of Stake (PoS) systems or security staking models. Slashing is designed to align incentives and discourage dishonest behavior.

  • Smart Contract:

    • A self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code.

  • Snapshot:

    • A method of recording token balances at a particular block height, used for voting, airdrops, and other functions.

  • Stablecoin:

    • A crypto asset designed to maintain a stable value, usually pegged to a fiat currency like the U.S. dollar. Stablecoins enable fast and predictable transactions without the typical volatility of other tokens.

  • Stakeholder:

    • A stakeholder is any individual or entity with a significant interest in the outcomes of a DAO, such as token holders, contributors, governance participants, or partner protocols. Token stakeholders specifically hold governance or utility tokens that give them rights to participate in decisions or share in protocol outcomes.

  • SubDAO:

    • A smaller, more focused DAO that operates within a larger DAO, often with specific objectives or responsibilities.

  • Sybil Attack:

    • A strategy where a single actor creates multiple fake identities to gain disproportionate influence within a decentralized system. Often used to manipulate votes, farm rewards, or exploit system resources. Protocols may implement Sybil resistance measures through staking, reputation, identity verification, or other mechanisms.

T

  • Timelock:

    • A timelock is a mechanism that enforces a programmed delay between the approval of an action on the blockchain (such as a governance proposal) and its execution. This delay provides transparency and reaction time against potentially harmful or controversial decisions.

  • Token

    • A token is a digital unit issued on a blockchain that represents some form of value, right, or function within an ecosystem. It can be used for governance, value exchange, incentives, access to services, or asset representation.

  • Token Minting The process by which new tokens are created and added to the total supply of a system.

  • Token Burning

    • A mechanism that removes tokens from circulation, usually by sending them to an inaccessible address.

  • Tokenomics:

    • The study of the economics of a cryptocurrency or token, including its supply, distribution, and utility.

  • Treasury:

    • The pool of digital assets held by a DAO, used to fund its operations and initiatives.

V

  • Voting:
    • The process by which DAO members express their preferences on proposals and decisions.

W

  • Wallet:

    • A wallet is an application or smart contract that allows users to store digital assets, sign transactions, and interact with blockchain protocols. Wallets can be controlled directly by individuals (Externally Owned Accounts, or EOAs) or governed by on-chain logic (smart contract wallets).

  • Web3:

    • The next generation of the internet, characterized by decentralization, blockchain technology, and user ownership.

Y

  • Yield Farming:
    • An investment strategy in which users deposit crypto assets into smart contracts (such as liquidity pools) in exchange for rewards, usually in the form of tokens. It’s a core practice in DeFi used to incentivize participation and liquidity.

Z

  • Zero-Knowledge Proofs:
    • A cryptographic technique that allows one party to prove knowledge of certain information (like a password or solution) without revealing the information itself. Commonly used in privacy-preserving protocols and blockchain scalability.