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I just learned about DAOs and Gas. Just a quick question DAO can scale on their own with smart contract but what happens when gas is used up. Will it continue to grow or just shut down?

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DAOs don't have any gas. Gas is always paid by whoever submits a transaction. So if you want to interact with a DAO, you create a transaction, send it to the blockchain and pay for its execution with gas, which is deducted from your wallet's Ether balance. If you don't have enough Ether to pay for the gas costs, you can't send the transaction.

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