DAOs can be effective for managing funds and decisions in open-source projects. They enable decentralized governance, allowing contributors to vote on funding allocations and project priorities transparently. Smart contracts automate financial transactions, reducing overhead and ensuring trustless execution. However, DAOs face challenges: complex setup, legal uncertainties, and potential voter apathy can hinder efficiency. They suit projects with active, engaged communities but may be overkill for smaller or less collaborative efforts. Careful design is key to success.