Skin in the Game: The Transformational Potential of Decentralized Autonomous Organizations

In stock

Publication History

Received: August 3, 2021
Revised: March 22, 2022; August 15, 2022; November 10, 2022; March 16, 2023; Apirl 10, 2023
Accepted: April 12, 2023
Published Online in Issue: March 1, 2024

Downloadable File

Decentralized autonomous organizations (DAOs)—collectively owned human-machine systems deployed on a blockchain that self-govern through smart contracts and the voluntary contributions of autonomous community members—exhibit the potential to facilitate collective action in managing digital commons. Yet the promise of decentralization and collective action is difficult to sustain. To this end, this paper critically examines the transformational potential of DAOs in the case of decentralized finance. Using a polycentric governance lens, we contribute to the literature on technology-enabled forms of organizing with a model explaining the transformational potential of DAOs to facilitate collective action in digital commons. Our study highlights that (1) DAOs are a new form of organizing enabled by blockchain technology in which individuals are free to pursue their objectives within a general system of rules enforced by smart contracts, (2) collective action for managing digital commons can be sustained through a set of three mechanisms—sustained participation, collective direction, and scaled organizing, and (3) DAOs tend to strike a balance between centralized and fully decentralized or community-based governance by implementing a polycentric governance system involving a combination of human and machine agency that creates skin in the game.

Additional Details
Author Eleunthia Wong Ellinger, Robert Wayne Gregory, Tobias Mini, Thomas Widjaja, and Ola Henfridsson
Year 2024
Volume 48
Issue 1
Keywords Decentralized autonomous organizations, new forms of organizing, blockchain organizing, collective action, polycentric governance, digital commons, decentralized finance
Page Numbers 245-272
Copyright © 2023 MISQ. All rights reserved.