7727.10 / How are decentralized autonomous organizations, or DAOs, connected to non-fungible tokens?

A decentralized autonomous organization, or DAO, is a type of community-led organization. While there are many different types of DAOs, in the context of non-fungible tokens, the DAO structure allows smaller investors to purchase portions of a single non-fungible token. Because many non-fungible tokens are valued at extremely high dollar values, the DAO exists to facilitate smaller investments in more expensive digital assets.

In addition to allowing small investors to participate in more expensive NFT projects, the DAO can also act as a facilitator so that owners of the NFT can collectively make decisions about the future of the NFT, including future sales or licensing agreements. The DAO can also provide the DAO community with a platform for fundraising to participate in future NFT projects. While the DAO itself is more akin to a group and is not a corporation, each participant may be granted voting rights via the underlying tokens.

Like other digital assets, the rules of the DAO are contained in the blockchain (meaning that anyone can access their code and see their transaction records). Those rules govern the decisions made by the members of the DAO community.