I tried to understand what a DAO token is that you can buy for Ether, but I can't.

And because my OSX Ether wallet has issues, I can't try to buy DAO tokens, so I hope you could explain me what it is.

Thanks a lot for your patience.

3 Answers 3


Your first port of call in understanding the DAO should be daohub.org/principles.html

But in short, the DAO is an automated trust fund. A DAO token is what you buy off the DAO smart contract during it's creation phase. You pay x to the contract which then registers you as holding y tokens. At the end of the creation phase, you wil hold some % of total token supply. Those tokens have voting power which you can cast 'yae' or 'nay' against proposals for funding (usually) made to the DAO. They become tradable on the open market like any other alt coin so if you don't like the way the DAO is heading, then you can simply sell up.

  • 1
    A trust fund is something that holds an amount "in trust" for someone, paying them out in installments. It's what rich college kids get. I think you mean "investment fund". May 18, 2016 at 10:35
  • The WP is titled, "Decentralized Autonomous Organization to Manage a Trust". As it holds funds then I find 'Trust Fund' the most appropriate definition regardless of the payout regimes. Simply, we 'trust' the code with our money instead of some banker. I think that definition the simplest understanding, unlike many other confusing descriptions like a VC fund or what ever.
    – o0ragman0o
    May 18, 2016 at 11:58
  • Something can be a "trust" without being a "trust fund". Regardless of the title, "trust" seems a poor descriptor for the DAO, since it's not holding money in trust for someone else at all. May 18, 2016 at 12:47
  • Ok, seems to be dancing with trivial legal definitions which I don't personally care much for. I've read the the code, I understand it and so I'm happy to put money in it... whatever it's called.
    – o0ragman0o
    May 18, 2016 at 13:01
  • Sure, all I'm saying is that calling it a "trust fund" is confusing, because it doesn't operate at all like what someone thinks of when they say that. Terminology matters when you're trying to explain something to someone. May 18, 2016 at 13:27

Each DAO token represents a percentage of the DAO. The amount of DAO tokens you hold represents how much weight your vote has towards proposals. It is also directly proportional to the reward tokens you receive from those proposals and the amount of ETH backing your DAO Tokens.


The U.S. Securities and Exchange Commission (SEC) has announced that Initial Coin Offerings (ICOs) and token sales are subject to federal securities laws. The announcement follows a report based on an investigation into The DAO’s token sale in 2016, in which the Commission found DAO tokens to be securities.


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