How Does a Decentralized Autonomous Organization (DAO) Structure Help Prevent Rug Pulls?
A DAO structure can prevent rug pulls by decentralizing control over the project's treasury and smart contracts. Key decisions, like withdrawing liquidity or changing contract code, require a majority vote from token holders, making it impossible for the founding team to unilaterally execute a malicious action.
Glossar
Dao Structure
Governance ⎊ The DAO structure defines the framework for decentralized autonomous organizations, where decision-making authority is distributed among token holders rather than centralized leadership.
Decentralized Autonomous Organization (DAO)
Governance ⎊ Decentralized Autonomous Organizations represent a novel framework for organizational structure, leveraging blockchain technology to enact rules encoded as transparent computer programs.
Rug Pulls
Mechanism ⎊ Rug pulls represent a malicious maneuver within decentralized finance, characterized by the rapid abandonment of a project by its developers, typically following a substantial influx of investor capital.