Decentralized Autonomous Organizations: Organizational Opportunities and Governance Challenges

Decentralized Autonomous Organizations (DAOs) are one of the most advanced blockchain-based applications, posing many opportunities for new governance models and organizational forms. Over the past decade, the number of DAOs and their assets under management have grown exponentially. DAOs offer many opportunities and advantages for organizations, including internal organizational democratization, external actor participation, transparency, advanced auditability, autonomy and automation of business processes and decisions, higher efficiency, lower cost, increased trust, and new organizational and governance forms. DAOs are being used for a wide range of business purposes, and their various governance elements and choices that can be made provide significant flexibility in their deployment. Although there are many opportunities, DAOs can face multiple (governance) challenges as well. As there are many differences between DAOs as a result of the various choices, one cannot approach a DAO as one organizational form. The choices in governance setup, business purpose, and even the chosen infrastructure can influence the long-term viability and should be made carefully.