When is a DAO Decentralized?

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When is a DAO Decentralized? / Axelsen, Henrik; Jensen, Johannes Rude; Ross, Omri.

In: Complex Systems Informatics and Modeling Quarterly, Vol. 2022, No. 31, 2022, p. 51-75.

Research output: Contribution to journal › Journal article › Research › peer-review

Harvard

Axelsen, H, Jensen, JR & Ross, O 2022, 'When is a DAO Decentralized?', Complex Systems Informatics and Modeling Quarterly, vol. 2022, no. 31, pp. 51-75. https://doi.org/10.7250/csimq.2022-31.04

APA

Axelsen, H., Jensen, J. R., & Ross, O. (2022). When is a DAO Decentralized? Complex Systems Informatics and Modeling Quarterly, 2022(31), 51-75. https://doi.org/10.7250/csimq.2022-31.04

Vancouver

Axelsen H, Jensen JR, Ross O. When is a DAO Decentralized? Complex Systems Informatics and Modeling Quarterly. 2022;2022(31):51-75. https://doi.org/10.7250/csimq.2022-31.04

Author

Axelsen, Henrik ; Jensen, Johannes Rude ; Ross, Omri. / When is a DAO Decentralized?. In: Complex Systems Informatics and Modeling Quarterly. 2022 ; Vol. 2022, No. 31. pp. 51-75.

Bibtex

@article{a25aa35731854c14b25669c56ff6464d,
title = "When is a DAO Decentralized?",
abstract = "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.",
keywords = "Blockchain, Compliance, DAO, DLT, Regulation, Sufficient Decentralization",
author = "Henrik Axelsen and Jensen, {Johannes Rude} and Omri Ross",
note = "Publisher Copyright: {\textcopyright} 2022 Henrik Axelsen, Johannes Rude Jensen, and Omri Ross.",
year = "2022",
doi = "10.7250/csimq.2022-31.04",
language = "English",
volume = "2022",
pages = "51--75",
journal = "Complex Systems Informatics and Modeling Quarterly",
issn = "2255-9922",
publisher = "Riga Technical University",
number = "31",

}

RIS

TY - JOUR

T1 - When is a DAO Decentralized?

AU - Axelsen, Henrik

AU - Jensen, Johannes Rude

AU - Ross, Omri

N1 - Publisher Copyright: © 2022 Henrik Axelsen, Johannes Rude Jensen, and Omri Ross.

PY - 2022

Y1 - 2022

N2 - 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.

AB - 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.

KW - Blockchain

KW - Compliance

KW - DAO

KW - DLT

KW - Regulation

KW - Sufficient Decentralization

U2 - 10.7250/csimq.2022-31.04

DO - 10.7250/csimq.2022-31.04

M3 - Journal article

AN - SCOPUS:85150196817

VL - 2022

SP - 51

EP - 75

JO - Complex Systems Informatics and Modeling Quarterly

JF - Complex Systems Informatics and Modeling Quarterly

SN - 2255-9922

IS - 31

ER -

ID: 384341667