DAO Governance
Jungsuk Han, Jongsub Lee, Tao Li
Abstract
This paper provides a rigorous examination of the operational mechanisms and governance structures inherent in Decentralized Autonomous Organizations (DAOs). The authors synthesize existing academic literature to delineate the evolving landscape of on-chain decision-making, focusing on the intersection of incentive alignment, tokenomics, and distributed consensus. By analyzing various governance models—from pure token-weighted voting to reputation-based systems—the paper identifies common pitfalls such as voter apathy and plutocratic tendencies. The work serves as a foundational text for understanding how organizational hierarchy is replaced or augmented by code-enforced protocols. It concludes by proposing a framework for evaluating the effectiveness of governance mechanisms in mitigating agency costs and enhancing organizational resilience in trust-minimized environments.
Key Findings
- 1DAO governance structures face significant challenges regarding voter participation and centralization.
- 2Token-weighted voting mechanisms often lead to plutocratic control, undermining decentralization.
- 3The paper introduces a framework for mapping governance outcomes to incentive design in on-chain protocols.
- 4Agency costs remain a critical hurdle for DAOs transitioning from experimental to operational maturity.
Topics
Citation
BibTeX
@misc{daogovernance2025,
title = {DAO Governance},
author = {Jungsuk Han and Jongsub Lee and Tao Li},
year = {2025},
howpublished = {\url{https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4346581}},
}Knowledge Explorer
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