The Rise of Decentralized Autonomous Organizations: Opportunities and Challenges · Stanford Journal of Blockchain Law & Policy

A DAO uses blockchains and smart contracts to organize the mechanics of corporate governance, thereby facilitating collective participation of distributed participants in the funding and production of community goods. There are now several prominent DAOs in the Ethereum community, and recent legal moves in places like Wyoming have begun establishin... See more

The decentralized automated organization (DAO) structure and the technologies underpinning them -- transparent ledgers, smart contracts, cryptocurrencies, automated governance and certifiable digital ownership -- were created specifically and solely to align incentives. And now that they have been in the market for several years, we are starting to... See more

DAOs have clear vulnerabilities that have yet to be fully addressed. The first DAO was famously hacked, with a bad-actor attempting to siphon off millions in Ethereum. While DAOs are safer today, they carry risks. Contributors often join pseudonymously, meaning reputation capital is not entirely on the line. Furthermore, without sufficient protecti... See more

 Perhaps the greatest threat to DAOs today is uncertainty. Without clear legal status, DAOs cannot take advantage of the same protections as corporations, such as legal personhood, limited liability and simplified tax arrangements.

Decentralized governance is at the heart of the ideological foundation of crypto: equal participation for all actors. The playbook of progressive decentralization is being followed by more decentralized finance (DeFi) projects. Users and tokenholders can now have more control over protocol parameters, treasury spending, and, in general, the industr... See more