Decentralized Autonomous Organizations (DAOs) in Governance

Abstract

Decentralized Autonomous Organizations (DAOs) have emerged as one of the most disruptive innovations in governance, offering new frameworks for collective decision-making, transparency, and accountability in both public and private spheres. Rooted in blockchain technology and powered by smart contracts, DAOs eliminate the need for traditional hierarchical management by enabling rules to be self-enforced and decisions to be executed automatically. This paper examines DAOs as governance mechanisms, tracing their historical development, theoretical underpinnings, and practical implementations across finance, civic engagement, digital cooperatives, and resource management. Through an extensive literature review, comparative case studies, and thematic content analysis, the study highlights DAOs’ potential to reduce agency problems, enhance participatory governance, and ensure auditability through immutable ledgers.

However, the analysis also reveals significant challenges, including legal ambiguity, technological vulnerabilities, token-weighted plutocracy, voter apathy, and scalability concerns that hinder their broader application. Results suggest that DAOs function effectively as experimental laboratories of algorithmic governance but are not yet fully equipped to replace traditional governance structures. Instead, hybrid models integrating decentralized decision-making with institutional oversight present the most viable path forward. By critically analyzing DAO case studies such as MakerDAO, ConstitutionDAO, and CityDAO, the study underscores their dual role as governance innovations and socio-political experiments that push the boundaries of trust, coordination, and autonomy in the digital age. The findings position DAOs not only as technological entities but also as frameworks capable of reshaping democratic practices, resource governance, and institutional legitimacy in the 21st century.