When is a DAO Decentralized?
While previously a nascent theoretical construct, decentralized autonomous organizations (DAO) have grown rapidly in recent years. DAOs typically emerge around the management of decentralized financial applications (DeFi) and thus benefit from the rapid growth of innovation in this sector. In respon...
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| Format: | Article |
| Language: | English |
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Riga Technical University Press
2022-07-01
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| Series: | Complex Systems Informatics and Modeling Quarterly |
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| Online Access: | https://csimq-journals.rtu.lv/article/view/5782 |
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| _version_ | 1832542942596694016 |
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| author | Henrik Axelsen Johannes Rude Jensen Omri Ross |
| author_facet | Henrik Axelsen Johannes Rude Jensen Omri Ross |
| author_sort | Henrik Axelsen |
| collection | DOAJ |
| description | While previously a nascent theoretical construct, decentralized autonomous organizations (DAO) have grown rapidly in recent years. DAOs typically emerge around the management of decentralized financial applications (DeFi) and thus benefit from the rapid growth of innovation in this sector. In response, global regulators increasingly voice the intent to regulate these activities. This may impose an excessive compliance burden on DAOs, unless they are deemed sufficiently decentralized to be regulated. Yet, decentralization is an abstract concept with scarce legal precedence. We investigate dimensions of decentralization through thematic analysis, combining extant literature with a series of expert interviews. We propose a definition of “sufficient decentralization” and present a general framework for the assessment of decentralization. We derive five dimensions for the assessment of decentralization in DAOs: Token-weighted voting, Infrastructure, Governance, Escalation and Reputation (TIGER). We present a discretionary sample application of the framework and five propositions on the future regulation and supervision of DAOs. We contribute new practical insights on the topic of compliance and decentralized organizations to the growing discourse on the application of blockchain technology in information systems (IS) and management disciplines. |
| format | Article |
| id | doaj-art-1446b8e1ee144741b11540a8777e38ea |
| institution | Kabale University |
| issn | 2255-9922 |
| language | English |
| publishDate | 2022-07-01 |
| publisher | Riga Technical University Press |
| record_format | Article |
| series | Complex Systems Informatics and Modeling Quarterly |
| spelling | doaj-art-1446b8e1ee144741b11540a8777e38ea2025-02-03T12:03:20ZengRiga Technical University PressComplex Systems Informatics and Modeling Quarterly2255-99222022-07-01031517510.7250/csimq.2022-31.042902When is a DAO Decentralized?Henrik Axelsen0Johannes Rude Jensen1Omri Ross2Department of Computer Science, University of Copenhagen, Universitetsparken 5, DK-2100 CopenhagenDepartment of Computer Science, University of Copenhagen, Universitetsparken 5, DK-2100 CopenhagenDepartment of Computer Science, University of Copenhagen, Universitetsparken 5, DK-2100 CopenhagenWhile previously a nascent theoretical construct, decentralized autonomous organizations (DAO) have grown rapidly in recent years. DAOs typically emerge around the management of decentralized financial applications (DeFi) and thus benefit from the rapid growth of innovation in this sector. In response, global regulators increasingly voice the intent to regulate these activities. This may impose an excessive compliance burden on DAOs, unless they are deemed sufficiently decentralized to be regulated. Yet, decentralization is an abstract concept with scarce legal precedence. We investigate dimensions of decentralization through thematic analysis, combining extant literature with a series of expert interviews. We propose a definition of “sufficient decentralization” and present a general framework for the assessment of decentralization. We derive five dimensions for the assessment of decentralization in DAOs: Token-weighted voting, Infrastructure, Governance, Escalation and Reputation (TIGER). We present a discretionary sample application of the framework and five propositions on the future regulation and supervision of DAOs. We contribute new practical insights on the topic of compliance and decentralized organizations to the growing discourse on the application of blockchain technology in information systems (IS) and management disciplines.https://csimq-journals.rtu.lv/article/view/5782daosufficient decentralizationregulationdltblockchaincompliance |
| spellingShingle | Henrik Axelsen Johannes Rude Jensen Omri Ross When is a DAO Decentralized? Complex Systems Informatics and Modeling Quarterly dao sufficient decentralization regulation dlt blockchain compliance |
| title | When is a DAO Decentralized? |
| title_full | When is a DAO Decentralized? |
| title_fullStr | When is a DAO Decentralized? |
| title_full_unstemmed | When is a DAO Decentralized? |
| title_short | When is a DAO Decentralized? |
| title_sort | when is a dao decentralized |
| topic | dao sufficient decentralization regulation dlt blockchain compliance |
| url | https://csimq-journals.rtu.lv/article/view/5782 |
| work_keys_str_mv | AT henrikaxelsen whenisadaodecentralized AT johannesrudejensen whenisadaodecentralized AT omriross whenisadaodecentralized |