https://blog.slock.it/a-primer-to-the-decentralized-autonomous-organization-dao-69fb125bd3cd#.msv5dngt4
"A DAO is an organization that’s self-governing and not influenced by outside forces: its software operates on its own, with its by-laws immutably written on the blockchain, not controlled by its creators. DAOs are formed by groups of like-minded individuals with specific projects and goals in mind — in our case, leveraging the unique opportunity at the intersection of IoT + Blockchain.
Would-be participants in the DAO can for a period of time acquire DAO tokens by sending Ether to the DAO. These tokens will give them the right to vote on business decisions (proportional to the number of tokens acquired) as well the opportunity to receive the rewards generated by the products and services built on the DAO’s behalf by the Service Provider.
A DAO purely manages funds: in itself it does not have the capabilities to build a product, write code or develop hardware. It requires a Service Provider for this purpose, which it hires by signing off on a proposal. This proposal is written in plain English and backed by smart contract defining the relationship between the DAO and its Service Provider: deliverables, responsibilities and operating parameters. All discussions around proposals take place off-chain on a service chosen by the DAO’s community.
While the Service Provider is bound by the term of the proposal, the DAO participants can elect to ‘pull the plug’ on the Service Provider at anytime if they feel they are not getting their money’s worth. This is a major advantage over the Kickstarter or ‘pre-sale’ models as it considerably minimizes risk.
It is also possible for the DAO to elect a replacement Service Provider, meaning that the project can continue where it left off. In essence, by decoupling finance from operations this DAO model survives where other means of funding would have failed."
"A DAO is an organization that’s self-governing and not influenced by outside forces: its software operates on its own, with its by-laws immutably written on the blockchain, not controlled by its creators. DAOs are formed by groups of like-minded individuals with specific projects and goals in mind — in our case, leveraging the unique opportunity at the intersection of IoT + Blockchain.
Would-be participants in the DAO can for a period of time acquire DAO tokens by sending Ether to the DAO. These tokens will give them the right to vote on business decisions (proportional to the number of tokens acquired) as well the opportunity to receive the rewards generated by the products and services built on the DAO’s behalf by the Service Provider.
A DAO purely manages funds: in itself it does not have the capabilities to build a product, write code or develop hardware. It requires a Service Provider for this purpose, which it hires by signing off on a proposal. This proposal is written in plain English and backed by smart contract defining the relationship between the DAO and its Service Provider: deliverables, responsibilities and operating parameters. All discussions around proposals take place off-chain on a service chosen by the DAO’s community.
While the Service Provider is bound by the term of the proposal, the DAO participants can elect to ‘pull the plug’ on the Service Provider at anytime if they feel they are not getting their money’s worth. This is a major advantage over the Kickstarter or ‘pre-sale’ models as it considerably minimizes risk.
It is also possible for the DAO to elect a replacement Service Provider, meaning that the project can continue where it left off. In essence, by decoupling finance from operations this DAO model survives where other means of funding would have failed."