I am currently reading the book Token Economy from Shermin Voshmgir, which I am finding a very comprehensive overview of the current state of the Web3. I am still very new to the topic though, so bare with me if my terminology is inaccurate.

I find one of the given definitions in the book quite puzzling, namely the one for DAO:

A DAOs represents a dynamic network governed by machine-enforceable protocols. They promise more decentralized and spontaneous coordination over the Internet between users who do not know or trust each other.

DAOs are usually formalized by Smart Contracts.

But isn't this very similar to what a consensus protocol and a distributed ledger achieve? They provide a mean for actors that don't trust each others to join and participate to a network with specific economy/dynamics. To me this sounds the same objective with two different names.

So in a way, I wouldn't see much difference between a Smart Contract and a Consensus Mechanism, let aside the purely technical aspect. Likewise: Ethereum could be a DAO in an of itself.

Can someone please tell me what is the difference then? Or are Smart Contracts actually a DAO inception?

1 Answer 1


Ethereum is not DAO, because its native token, ETH, is not used in governance.

Furthermore, consensus protocol and a distributed ledger achieve technical finality of a transaction. DAOs achieve governance of an organisation. They are very separate concerns.

  • 1
    Given the definition the original poster included, a "native token" isn't required for an organization to be labeled a DAO. Hence, your answer is invalid. Feb 18, 2021 at 13:04
  • 1
    The definition given by Mr Voshmgir is bad. It is not aligned with DAOs are understood as today. Feb 18, 2021 at 18:57
  • @MikkoOhtamaa where does your definition come from? I would like to read about it Feb 19, 2021 at 7:23
  • You can e.g. read industry news sources about DAOs Feb 19, 2021 at 10:48
  • Another long list of DAOs snapshot.page/# Feb 19, 2021 at 11:51

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