The Ins and Outs of Decentralized Autonomous Organizations (Daos)

Abstract

Despite the increase in number of blockchain-based Decentralized Autonomous Organizations (DAOs), there is no consensus of what constitutes a DAO. This paper provides an in-depth study of DAOs by analyzing definitions, characteristics and emerging developments. Existing definitions in literature hardly recognize common functionalities and intermingle coded DAOs, platforms and blockchain DAOs. We develop a comprehensive DAO definition based on key characteristics, current definitions and empirical analysis of 1,859 DAOs. We found that many DAOs are inactive and provided the first empirical evidence regarding decentralization characteristic of DAOs: a threshold of 20 tokenholders seems to be crucial for sustaining DAOs’ activity levels. Finally, based on empirical analysis of 4,592 perceived DAOs, the emerging development of off-chain voting is identified, which challenges the automatic execution of decisions, thus a violation of the autonomous nature of DAOs. We suggest for future research on the effect of DAO governance structures on their long-term survivability.

Keywords: blockchain, Decentralized Autonomous Organization (DAO), Governance, Decentralization