Blockchain · Original publication: 15 January 2020
Understanding DAOs — Governance You Can Read Off the Chain
By Tan Ji Sheng · Substantively updated 05 September 2026
First published on TriveAcademy in January 2020 — rewritten and expanded here.
Most explanations of a DAO — a Decentralized Autonomous Organization — start with the acronym and end with a utopia. I'd rather start from the boring, useful middle, because at Trivechain we didn't just write about DAOs. We ran one. The treasury that funded our development was governed by masternode operators voting on-chain, and living inside that system taught me more about its edges than any whitepaper did.
What a DAO actually is
A DAO coordinates decisions through shared governance rules and digital infrastructure. The details vary: some use smart contracts for execution; others combine on-chain voting with people, multisignature signers or legal entities implementing the result.
For Trivechain, the relevant mechanism was a masternode-governed treasury: operators voted on proposals and the network applied its treasury rules. That is the specific model discussed below. It does not mean every DAO is fully automatic, permissionless, or implemented as a general-purpose smart contract.
How Trivechain's DAO worked
Ours was concrete, not theoretical. Trivechain ran a treasury governed by masternode operators and denominated in our native token, TRVC:
- To put up a proposal, you staked TRVC. A small cost, but enough to keep spam out.
- Masternode operators voted — one node, one vote — agree or disagree, over a fixed window.
- If a proposal passed, the treasury funded it in TRVC, and the payout executed on-chain, automatically.
The proposals ran the range you'd expect: a marketing push, a piece of protocol work, an integration someone wanted built. The money didn't move because a CEO signed a form. It moved because the network voted and the chain did what the vote said.
The honest limits
Operating a DAO makes you honest about the model's tradeoffs quickly, because you feel each one:
- Turnout is hard. Plenty of eligible voters simply don't vote. Quorum is a real, recurring problem, not a footnote.
- Votes follow weight. "One node, one vote" sounds egalitarian until you ask who can afford the most nodes. Any stake-weighted system tilts toward whoever holds the most.
- On-chain governance is slow. A fixed voting window is excellent for legitimacy and terrible for anything urgent.
- Code executes exactly what passed — mistakes included. There's no manager to catch a bad proposal after the vote. The contract just does it.
None of these are reasons not to build a DAO. They're the reason a DAO is a design choice, not a moral upgrade. You trade a manager's discretion for a crowd's rules, and you inherit the crowd's apathy and the rules' rigidity right alongside the transparency.
Why it still matters
What a DAO actually buys you is narrow and real: decisions and money that anyone can audit, and a treasury no single person can quietly drain. In an industry where "trust me" has burned so many people, that's worth a lot. It is not a cure for coordination — humans still have to show up, read, and vote — but it changes what you have to trust. You stop trusting the person and start trusting the rules, and you can check the rules yourself.
Back in 2020, that was still a strange thing to explain to most people. It's less strange now — and the tradeoffs I felt running one are the same ones every DAO still argues about today.