Decentralised Autonomous Organisations (DAOs) as Data Trusts: A General-purpose Data Governance Framework for Decentralised Data Ownership, Storage, and Utilisation
14 Pages Posted: 9 Feb 2022 Last revised: 1 Mar 2022
Date Written: December 20, 2021
This piece investigates if and how principles of data trusts might apply to “Decentralised Autonomous Organisations” (DAOs) as a data governance structure for digital data trusts. In data trusts, a legal entity is appointed as the trustee to act on behalf of the contributors and beneficiaries of data as an independent fiduciary steward of data. The intent of Decentralised Autonomous Organisations is to enable people to coordinate and govern themselves, mediated by self-executing rules encoded in software infrastructure on a public blockchain. Rather than appointing a legal entity to negotiate and enforce rules through legal mechanisms, rules in decentralised blockchain-based systems are inscribed in software code where they are transparent, verifiable, and enforceable, and digital tokens are used to align incentives among diverse stakeholders in the system. If DAOs were data trusts, then the DAO would have the fiduciary duty for data governance on behalf of the interests of participants. To explore this idea, I outline the fundamentals of trusts, the concept of data trusts as a data governance framework, and the idea of DAOs as data trusts to steward and utilise data on behalf of participants. I then explore possible use cases and early examples of this governance infrastructure in practice in blockchain communities. I find that DAOs are a promising digital governance infrastructure for people to operationalise the principles of data trusts where the promise of data stewardship is entrusted to software code and self-governance, rather than third-party legal representatives. This contribution lends itself to further scholarly research and industry practice to test the concept of DAOs as data trusts as a data governance model for greater individual autonomy, verifiability, and benefit over one’s data and how it is used.
Keywords: decentralized autonomous organization, data trust, data governance, blockchain
JEL Classification: O10, O00, O30, O14, O17, M10, M13, Z10
Suggested Citation: Suggested Citation