Centralized Governance in Decentralized Autonomous Organizations

Ivan Sedliačik () and Kamil Ščerba ()
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Ivan Sedliačik: Matej Bel University in Banská Bystrica
Kamil Ščerba: Matej Bel University in Banská Bystrica

Chapter Chapter 46 in Applied Economic Research and Trends, 2024, pp 831-838 from Springer

Abstract: Abstract Blockchain and cryptography enable secure collaboration in a digital environment without the need for a central institution. The study deals with decentralized autonomous organizations (DAOs) and their risks. The goal of the study was to identify legal, regulatory, and manipulation risks. In literature review, we cover the basic characteristics of centralization and decentralization based on blockchain technology, smart contracts, decentralized finance, and the functioning of decentralized autonomous organizations (DAOs). We examine sample of 20 selected DAOs that comprise 65.7% of the total treasury value from the point of view of possible regulatory, legal, and manipulation risks. Our findings show a paradox in great concentration of voting power in decentralized organizations. Manipulation risks arise from token ownership concentration, where a small number of participants can influence voting outcomes. These findings emphasize the need for addressing governance and regulatory aspects of DAOs to ensure transparency, fairness, and decentralization. In our qualitative research, we apply the praxeological approach of the Austrian school of economics with a priori approach, axiom, and deductive logic.

Keywords: Decentralized autonomous organizations; Blockchain; Risk; Governance; O16; G30; L20 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-031-49105-4_46

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DOI: 10.1007/978-3-031-49105-4_46

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