Competing DAOs

53 Pages Posted: 19 Dec 2022 Last revised: 6 Feb 2023

See all articles by Jun Aoyagi

Jun Aoyagi

HKUST, Finance Department

Yuki Ito

University of California, Berkeley

Date Written: November 18, 2022


A Decentralized Autonomous Organization (DAO) is an entity with no central control and ownership. A group of users discuss, propose, and implement a new platform design with smart contracts on blockchain, taking control away from a centralized platformer. We develop a model of platform competition with the DAO governance structure and analyze how strategic complementarity affects the development of DAOs. Compared to traditional competition between centralized platformers, a DAO introduces an additional layer of competition played by users. Since users are multi-homing, they propose a new platform design by internalizing interactions between platforms and create additional values, which is reflected by the price of a governance token. A platformer can extract this value by issuing a token but must relinquish control of her platform, losing potential fee revenue. Analyzing this tradeoff, we show that centralized platformers tend to be DAOs when strategic complementarity is strong, while an intermediate degree of strategic complementarity leads to the coexistence of a DAO and a traditional centralized platform.

Keywords: DAO, DeFi, blockchain, market structure, platform competition, liquidity

JEL Classification: G1, D4, L1

Suggested Citation

Aoyagi, Jun and Ito, Yuki, Competing DAOs (November 18, 2022). Available at SSRN: or

Jun Aoyagi (Contact Author)

HKUST, Finance Department ( email )

United States

Yuki Ito

University of California, Berkeley ( email )

579 Evans Hall
Berkeley, CA 94709
United States

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