The DAO (decentralized autonomous organization) is a use-case of Ethereum that founder Vitalik Buterin has been championing since the creation of the crypto-currency. By operating as a DAO, an organization is able to remove the possibility of corruption whilst also cutting out the need for bureaucracy and allowing users to engage directly with each other and without friction. A DAO operates entirely on the blockchain (in this case, the Ethereum world computer blockchain) and is funded by shareholders.
A DAO is currently a concept, an ideology; however the project in question (The DAO – daohub.org) plans to turn this concept into a reality. Users can buy into The DAO by purchasing DAO tokens with Ether and DAO tokens act as shares, allowing users with these tokens to cast votes – typically to back new projects or introduce new features to The DAO.
The DAO tokens (as with all tokens on the Ethereum blockchain) are a derivative of Ether. During the current pre-sale, which started on May 1st and lasting 28 days, users are able to buy DAO tokens for Ether. Once the pre-sale is over, no further DAO tokens can be created, however users will still be able to exchange them freely on a number of popular crypto-currency exchanges.
As for the price of Ether, the recent climb in price could well have been fuelled by The DAO’s pre-sale – users wanting to get in on The DAO’s deflationary token will have had to have bought Ether to exchange said Ether for DAO tokens. With the pre-sale lasting 28 days, who knows where this climb might stop – and how the price of a DAO token may change once creation has ceased…