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DAO Governance

This paper provides a rigorous examination of the operational mechanisms and governance structures inherent in Decentralized Autonomous Organizations (DAOs). Th

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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. Authors: Jungsuk Han, Jongsub Lee, Tao Li Publication: Academic Paper Publication date: 2025-01-01

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Key findings

  • DAO governance structures face significant challenges regarding voter participation and centralization.
  • Token-weighted voting mechanisms often lead to plutocratic control, undermining decentralization.
  • The paper introduces a framework for mapping governance outcomes to incentive design in on-chain protocols.
  • Agency costs remain a critical hurdle for DAOs transitioning from experimental to operational maturity.

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Citation

Jungsuk Han, Jongsub Lee, Tao Li (2025). DAO Governance. Academic Paper. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4346581
Canonical knowledge ID: research:dao-governance