Control of Decentralized Autonomous Organizations

Abstract

Blockchain technology has facilitated the emergence of a new type of organizational form, Decentralized Autonomous Organizations (DAOs). In contrast to corporations and other types of business organizations, DAOs do not have managers or directors with formal decision rights. Instead, the members of DAOs collectively make decisions by voting on proposals. The governance process is encoded and executed via a smart contract, negating the need for centralized leadership. We examine the control of DAOs by analyzing 10,639 proposals across 151 DAOs. We find that, rather than democratizing decision-making, a small number, often three or fewer, of entities exert control over most decisions.

Keywords: Blockchain, Decentralized Autonomous Organizations, Decentralized Finance, Stablecoins, Entrepreneurship, Organizational Economics, Corporate Governance, Political Economy

JEL Classification: O30, G34, M10, M50