What Do DAOs Really Contribute?

Abstract Decentralized autonomous organizations (DAOs), like blockchains, were expected to revolutionize the economy by solving the principal–agent problem in the corporate form. Yet, the very first DAO (“The DAO”) suffered a catastrophic hack that led to the Ethereum blockchain’s forking. Despite this failure, and the 2022 crypto markets collapse, enthusiasm for DAOs as corporate alternatives persists in crypto circles. Nine years on, however, DAOs remain a niche structure with little traction outside crypto projects. This chapter posits that this is due to fundamental flaws in the case for DAOs as corporate replacements. Crypto proponents often dismiss centralization and opacity as wholly undesirable, overlooking their functional value in business organizations. They also fail to recognize that blockchain’s security, transparency, and predictability are narrowly bound and come at a cost, rendering DAOs poorly equipped to handle the risks organizations face in the real world. These trade-offs explain why DAOs are less a revolution, more naïve wishful thinking.