A review of DAO governance: Recent literature and emerging trends

Jungsuk Han, Jongsub Lee and Tao Li

Journal of Corporate Finance, 2025, vol. 91, issue C

Abstract: Decentralized autonomous organizations (DAOs) have emerged as a new organizational structure that leverages smart contracts and blockchain technology. Academics and practitioners have paid significant attention to DAOs, yet DAO decision-making processes and the broader implications remain under-studied. This paper aims to fill this gap in the literature. First, we compare the proposal- and voting-based governance mechanisms of DAOs with those of traditional corporate governance. Second, we introduce various novel voting models adopted by DAOs. Third, we discuss DAOs' drawbacks and highlight a unique agency problem arising from large token holders, termed “whales,” within these organizations. The concentrated ownership such whales, whose interests may diverge from those of smaller token holders (i.e., users), obtain can result in governance vulnerabilities. After discussing recent instances of investor activism and contentious votes involving DAOs, we conclude by surveying the literature on the optimal DAO design.

Keywords: Corporate governance; Decentralized autonomous organization (DAO); Blockchain; Smart contracts; Voting models; Conflicts of interest; Ownership concentration; Participation; Whales; Dual-class voting; Governance token; Vote-escrow token; Investor activism (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:91:y:2025:i:c:s0929119925000021

DOI: 10.1016/j.jcorpfin.2025.102734

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