Decentralized Autonomous Organization - Revision history

Tebaldi at 14:48, 1 May 2023

2023-05-01T14:48:51Z

← Older revision		Revision as of 14:48, 1 May 2023
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	A Decentralized Autonomous Organization, DAO hereafter, is an organization that automates its operations. The DAOs’ rules and transactions are maintained on a blockchain, which promotes information transparency among stakeholders, while smart contract's code controls the implementation of the DAOs’ regulations.		A Decentralized Autonomous Organization, DAO hereafter, is an organization that automates its operations. The DAOs’ rules and transactions are maintained on a blockchain, which promotes information transparency among stakeholders, while smart contract's code controls the implementation of the DAOs’ regulations.

	[[DAO governance]] is run by token holders, entities who are in possession of these governance tokens in a cryptocurrency wallet are qualified to participate in the DAO’s operation and voting. Similar to any other digital asset, DAO membership can be traded. Governance is carried out by a series of proposals that members vote on through the blockchain, and having more governance tokens typically equates to having more voting power (see more on [[Voting Mechanisms in DAO\|voting mechanisms on DAO]]). Members’ contributions to a DAO’s organizational objectives may occasionally be recorded and internally paid.		[[DAO Governance\|DAO governance]] is run by token holders, entities who are in possession of these governance tokens in a cryptocurrency wallet are qualified to participate in the DAO’s operation and voting. Similar to any other digital asset, DAO membership can be traded. Governance is carried out by a series of proposals that members vote on through the blockchain, and having more governance tokens typically equates to having more voting power (see more on [[Voting Mechanisms in DAO\|voting mechanisms on DAO]]). Members’ contributions to a DAO’s organizational objectives may occasionally be recorded and internally paid.

	While it is not hard to define DAOs in technical terms or from an economic point of view, such definition from a legal or social standpoint is proven to be challenging. Like most other new technologies, legislators and governments wait for a proper establishment of these entities before they take a firm position towards them, whether friendly or hostile. The lack of legal jurisdiction positions towards DAOs worldwide has resulted in attempts to fit DAOs in the existing legal formats when applicable, such as associations, foundations, or general partnerships. Hassan and Filippi (2021)<ref name="Hassan2021">Hassan, S. and Filippi, P. D. (2021). Decentralized autonomous organization. Internet Policy Review, 10(2).</ref> lists and discusses the different definitions of DAOs used both in academics and industry. They assert that most academic definitions include the following distinctive characteristics:		While it is not hard to define DAOs in technical terms or from an economic point of view, such definition from a legal or social standpoint is proven to be challenging. Like most other new technologies, legislators and governments wait for a proper establishment of these entities before they take a firm position towards them, whether friendly or hostile. The lack of legal jurisdiction positions towards DAOs worldwide has resulted in attempts to fit DAOs in the existing legal formats when applicable, such as associations, foundations, or general partnerships. Hassan and Filippi (2021)<ref name="Hassan2021">Hassan, S. and Filippi, P. D. (2021). Decentralized autonomous organization. Internet Policy Review, 10(2).</ref> lists and discusses the different definitions of DAOs used both in academics and industry. They assert that most academic definitions include the following distinctive characteristics:

Tebaldi at 14:48, 1 May 2023

2023-05-01T14:48:10Z

← Older revision		Revision as of 14:48, 1 May 2023
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	A Decentralized Autonomous Organization, DAO hereafter, is an organization that automates its operations. The DAOs’ rules and transactions are maintained on a blockchain, which promotes information transparency among stakeholders, while smart contract's code controls the implementation of the DAOs’ regulations.		A Decentralized Autonomous Organization, DAO hereafter, is an organization that automates its operations. The DAOs’ rules and transactions are maintained on a blockchain, which promotes information transparency among stakeholders, while smart contract's code controls the implementation of the DAOs’ regulations.

	DAO governance is run by token holders, entities who are in possession of these governance tokens in a cryptocurrency wallet are qualified to participate in the DAO’s operation and voting. Similar to any other digital asset, DAO membership can be traded. Governance is carried out by a series of proposals that members vote on through the blockchain, and having more governance tokens typically equates to having more voting power (see more on [[Voting Mechanisms in DAO\|voting mechanisms on DAO]]). Members’ contributions to a DAO’s organizational objectives may occasionally be recorded and internally paid.		[[DAO governance]] is run by token holders, entities who are in possession of these governance tokens in a cryptocurrency wallet are qualified to participate in the DAO’s operation and voting. Similar to any other digital asset, DAO membership can be traded. Governance is carried out by a series of proposals that members vote on through the blockchain, and having more governance tokens typically equates to having more voting power (see more on [[Voting Mechanisms in DAO\|voting mechanisms on DAO]]). Members’ contributions to a DAO’s organizational objectives may occasionally be recorded and internally paid.

	While it is not hard to define DAOs in technical terms or from an economic point of view, such definition from a legal or social standpoint is proven to be challenging. Like most other new technologies, legislators and governments wait for a proper establishment of these entities before they take a firm position towards them, whether friendly or hostile. The lack of legal jurisdiction positions towards DAOs worldwide has resulted in attempts to fit DAOs in the existing legal formats when applicable, such as associations, foundations, or general partnerships. Hassan and Filippi (2021)<ref name="Hassan2021">Hassan, S. and Filippi, P. D. (2021). Decentralized autonomous organization. Internet Policy Review, 10(2).</ref> lists and discusses the different definitions of DAOs used both in academics and industry. They assert that most academic definitions include the following distinctive characteristics:		While it is not hard to define DAOs in technical terms or from an economic point of view, such definition from a legal or social standpoint is proven to be challenging. Like most other new technologies, legislators and governments wait for a proper establishment of these entities before they take a firm position towards them, whether friendly or hostile. The lack of legal jurisdiction positions towards DAOs worldwide has resulted in attempts to fit DAOs in the existing legal formats when applicable, such as associations, foundations, or general partnerships. Hassan and Filippi (2021)<ref name="Hassan2021">Hassan, S. and Filippi, P. D. (2021). Decentralized autonomous organization. Internet Policy Review, 10(2).</ref> lists and discusses the different definitions of DAOs used both in academics and industry. They assert that most academic definitions include the following distinctive characteristics:

Tebaldi: /* What is a DAO? */

2023-02-06T15:22:10Z

What is a DAO?

← Older revision		Revision as of 15:22, 6 February 2023
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	A Decentralized Autonomous Organization, DAO hereafter, is an organization that automates its operations. The DAOs’ rules and transactions are maintained on a blockchain, which promotes information transparency among stakeholders, while smart contract's code controls the implementation of the DAOs’ regulations.		A Decentralized Autonomous Organization, DAO hereafter, is an organization that automates its operations. The DAOs’ rules and transactions are maintained on a blockchain, which promotes information transparency among stakeholders, while smart contract's code controls the implementation of the DAOs’ regulations.

	DAO governance is run by token holders, entities who are in possession of these governance tokens in a cryptocurrency wallet are qualified to participate in the DAO’s operation and voting. Similar to any other digital asset, DAO membership can be traded. Governance is carried out by a series of proposals that members vote on through the blockchain, and having more governance tokens typically equates to having more voting power (see more on [[voting mechanisms on DAO]]). Members’ contributions to a DAO’s organizational objectives may occasionally be recorded and internally paid.		DAO governance is run by token holders, entities who are in possession of these governance tokens in a cryptocurrency wallet are qualified to participate in the DAO’s operation and voting. Similar to any other digital asset, DAO membership can be traded. Governance is carried out by a series of proposals that members vote on through the blockchain, and having more governance tokens typically equates to having more voting power (see more on [[Voting Mechanisms in DAO\|voting mechanisms on DAO]]). Members’ contributions to a DAO’s organizational objectives may occasionally be recorded and internally paid.

	While it is not hard to define DAOs in technical terms or from an economic point of view, such definition from a legal or social standpoint is proven to be challenging. Like most other new technologies, legislators and governments wait for a proper establishment of these entities before they take a firm position towards them, whether friendly or hostile. The lack of legal jurisdiction positions towards DAOs worldwide has resulted in attempts to fit DAOs in the existing legal formats when applicable, such as associations, foundations, or general partnerships. Hassan and Filippi (2021)<ref name="Hassan2021">Hassan, S. and Filippi, P. D. (2021). Decentralized autonomous organization. Internet Policy Review, 10(2).</ref> lists and discusses the different definitions of DAOs used both in academics and industry. They assert that most academic definitions include the following distinctive characteristics:		While it is not hard to define DAOs in technical terms or from an economic point of view, such definition from a legal or social standpoint is proven to be challenging. Like most other new technologies, legislators and governments wait for a proper establishment of these entities before they take a firm position towards them, whether friendly or hostile. The lack of legal jurisdiction positions towards DAOs worldwide has resulted in attempts to fit DAOs in the existing legal formats when applicable, such as associations, foundations, or general partnerships. Hassan and Filippi (2021)<ref name="Hassan2021">Hassan, S. and Filippi, P. D. (2021). Decentralized autonomous organization. Internet Policy Review, 10(2).</ref> lists and discusses the different definitions of DAOs used both in academics and industry. They assert that most academic definitions include the following distinctive characteristics:

Tebaldi at 15:21, 6 February 2023

2023-02-06T15:21:14Z

← Older revision		Revision as of 15:21, 6 February 2023
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	A Decentralized Autonomous Organization, DAO hereafter, is an organization that automates its operations. The DAOs’ rules and transactions are maintained on a blockchain, which promotes information transparency among stakeholders, while smart contract's code controls the implementation of the DAOs’ regulations.		A Decentralized Autonomous Organization, DAO hereafter, is an organization that automates its operations. The DAOs’ rules and transactions are maintained on a blockchain, which promotes information transparency among stakeholders, while smart contract's code controls the implementation of the DAOs’ regulations.

	DAO governance is run by token holders, entities who are in possession of these governance tokens in a cryptocurrency wallet are qualified to participate in the DAO’s operation and voting. Similar to any other digital asset, DAO membership can be traded. Governance is carried out by a series of proposals that members vote on through the blockchain, and having more governance tokens typically equates to having more voting power. Members’ contributions to a DAO’s organizational objectives may occasionally be recorded and internally paid.		DAO governance is run by token holders, entities who are in possession of these governance tokens in a cryptocurrency wallet are qualified to participate in the DAO’s operation and voting. Similar to any other digital asset, DAO membership can be traded. Governance is carried out by a series of proposals that members vote on through the blockchain, and having more governance tokens typically equates to having more voting power (see more on [[voting mechanisms on DAO]]). Members’ contributions to a DAO’s organizational objectives may occasionally be recorded and internally paid.

	While it is not hard to define DAOs in technical terms or from an economic point of view, such definition from a legal or social standpoint is proven to be challenging. Like most other new technologies, legislators and governments wait for a proper establishment of these entities before they take a firm position towards them, whether friendly or hostile. The lack of legal jurisdiction positions towards DAOs worldwide has resulted in attempts to fit DAOs in the existing legal formats when applicable, such as associations, foundations, or general partnerships. Hassan and Filippi (2021)<ref name="Hassan2021">Hassan, S. and Filippi, P. D. (2021). Decentralized autonomous organization. Internet Policy Review, 10(2).</ref> lists and discusses the different definitions of DAOs used both in academics and industry. They assert that most academic definitions include the following distinctive characteristics:		While it is not hard to define DAOs in technical terms or from an economic point of view, such definition from a legal or social standpoint is proven to be challenging. Like most other new technologies, legislators and governments wait for a proper establishment of these entities before they take a firm position towards them, whether friendly or hostile. The lack of legal jurisdiction positions towards DAOs worldwide has resulted in attempts to fit DAOs in the existing legal formats when applicable, such as associations, foundations, or general partnerships. Hassan and Filippi (2021)<ref name="Hassan2021">Hassan, S. and Filippi, P. D. (2021). Decentralized autonomous organization. Internet Policy Review, 10(2).</ref> lists and discusses the different definitions of DAOs used both in academics and industry. They assert that most academic definitions include the following distinctive characteristics:

Tebaldi: /* Open issues */

2022-08-20T13:17:37Z

Open issues

← Older revision		Revision as of 13:17, 20 August 2022
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	== Open issues ==		== Open issues ==
	In line of principle, a DAO might be financed relying on these alternative financing contracts but their optimal use cannot be characterized without a precise extension of the theory of property rights. For example, it is necessary to rule the renegotiation issues that might arise in the presence of DAO distress. Renegotiation clauses are relevant to clearly define stakeholder rights in the presence of ambiguities that might arise, for example, from coding weaknesses as it happened in the famous case of "The DAO"<ref>See https://www.atlantafed.org/cenfis/publications/notesfromthevault/1607</ref>.		In line of principle, a DAO might be financed relying on these alternative financing contracts but their optimal use cannot be characterized without a precise extension of the theory of property rights. Halonen-Akatwijuka and Hart (2013)<ref>Halonen-Akatwijuka, Maija, and Oliver D. Hart, 2013. "More Is Less: Why Parties May Deliberately Write Incomplete Contracts." No. w19001. National Bureau of Economic Research.</ref> hypothesize that incomplete contract terms may make renegotiation less costly or more efficient. For example, it is necessary to rule the renegotiation issues that might arise in the presence of DAO distress. Renegotiation clauses are relevant to clearly define stakeholder rights in the presence of ambiguities that might arise, for example, from coding weaknesses as it happened in the famous case of "The DAO"<ref>See https://www.atlantafed.org/cenfis/publications/notesfromthevault/1607</ref>.

	== Bibliography ==		== Bibliography ==
	<references />		<references />

Tebaldi: /* Open issues */

2022-08-20T13:13:59Z

Open issues

← Older revision		Revision as of 13:13, 20 August 2022
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	== Open issues ==		== Open issues ==
	In line of principle, a DAO might be financed relying on these alternative financing contracts but their optimal use cannot be characterized without a precise extension of the theory of property rights. For example, it is necessary to rule the renegotiation issues that might arise in the presence of DAO distress. ~~These renegotiation issues~~ are relevant to clearly define stakeholder rights in the presence of ambiguities that might arise, for example, from coding weaknesses as it happened in the famous case of "The DAO"<ref>See https://www.atlantafed.org/cenfis/publications/notesfromthevault/1607</ref>.		In line of principle, a DAO might be financed relying on these alternative financing contracts but their optimal use cannot be characterized without a precise extension of the theory of property rights. For example, it is necessary to rule the renegotiation issues that might arise in the presence of DAO distress. Renegotiation clauses are relevant to clearly define stakeholder rights in the presence of ambiguities that might arise, for example, from coding weaknesses as it happened in the famous case of "The DAO"<ref>See https://www.atlantafed.org/cenfis/publications/notesfromthevault/1607</ref>.

	== Bibliography ==		== Bibliography ==
	<references />		<references />

Tebaldi: /* Economics of information and the DAO */

2022-08-20T13:11:37Z

Economics of information and the DAO

← Older revision		Revision as of 13:11, 20 August 2022
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	Classic agency theory depicts an ideal scenario in which a single “entrepreneur-manager" makes optimal choices and then implements them, functioning as both principle and agent for his benefit. If there is a separation between ownership and management, agents will pursue their own interests independent from the interests of the principals in the absence of proper incentives (Fama and Jensen, (1983)<ref name="famajensen">Fama, E. F. and Jensen, M. C. (1983). Separation of ownership and control. The Journal of Law and Economics, 26(2):301–325.</ref>; Shapiro, (2000)<ref name="shapiro">Shapiro, S. P. (2005). Agency theory. Annual Review of Sociology, 31(1):263–284.</ref>). The DAO suggests a “next-best-case" of Agency Theory, in which numerous entrepreneur-managers have no need to trust one another but can nonetheless act as a single-minded entrepreneur-manager (Morrison et al., (2020)<ref>Morrison, R., Mazey, N. C. H. L., and Wingreen, S. C. (2020). The dao controversy: The case for a new species of corporate governance? Frontiers in Blockchain, 3.</ref>). Because the blockchain became the vehicle for managing trust, players don’t have to trust anybody else except the system.		Classic agency theory depicts an ideal scenario in which a single “entrepreneur-manager" makes optimal choices and then implements them, functioning as both principle and agent for his benefit. If there is a separation between ownership and management, agents will pursue their own interests independent from the interests of the principals in the absence of proper incentives (Fama and Jensen, (1983)<ref name="famajensen">Fama, E. F. and Jensen, M. C. (1983). Separation of ownership and control. The Journal of Law and Economics, 26(2):301–325.</ref>; Shapiro, (2000)<ref name="shapiro">Shapiro, S. P. (2005). Agency theory. Annual Review of Sociology, 31(1):263–284.</ref>). The DAO suggests a “next-best-case" of Agency Theory, in which numerous entrepreneur-managers have no need to trust one another but can nonetheless act as a single-minded entrepreneur-manager (Morrison et al., (2020)<ref>Morrison, R., Mazey, N. C. H. L., and Wingreen, S. C. (2020). The dao controversy: The case for a new species of corporate governance? Frontiers in Blockchain, 3.</ref>). Because the blockchain became the vehicle for managing trust, players don’t have to trust anybody else except the system.

	Tinn<ref>Tinn, Katrin, 'Smart' Contracts and External Financing (October 2018). Available at SSRN: http://dx.doi.org/10.2139/ssrn.3072854</ref> (2018) observes that the blockchain technology makes it possible to design financing contracts that are based on reliable and up-to-date records of transactions and develops a theoretical model that uses dynamic contract theory to derive optimal financing contracts in this new environment. In line of principle, a DAO might be financed relying on these alternative financing contracts but their optimal use cannot be characterized without a precise extension of the theory of property rights. For example, it is necessary to rule the renegotiation issues that might arise in the presence of DAO distress. These renegotiation issues are relevant to clearly define stakeholder rights in the presence of ambiguities that might arise, for example, from coding weaknesses as it happened in the famous case of "The DAO"<ref>See https://www.atlantafed.org/cenfis/publications/notesfromthevault/1607</ref>.		Tinn<ref>Tinn, Katrin, 'Smart' Contracts and External Financing (October 2018). Available at SSRN: http://dx.doi.org/10.2139/ssrn.3072854</ref> (2018) observes that the blockchain technology makes it possible to design financing contracts that are based on reliable and up-to-date records of transactions and develops a theoretical model that uses dynamic contract theory to derive optimal financing contracts in this new environment.

			== Open issues ==
			In line of principle, a DAO might be financed relying on these alternative financing contracts but their optimal use cannot be characterized without a precise extension of the theory of property rights. For example, it is necessary to rule the renegotiation issues that might arise in the presence of DAO distress. These renegotiation issues are relevant to clearly define stakeholder rights in the presence of ambiguities that might arise, for example, from coding weaknesses as it happened in the famous case of "The DAO"<ref>See https://www.atlantafed.org/cenfis/publications/notesfromthevault/1607</ref>.

	== Bibliography ==		== Bibliography ==
	<references />		<references />

Tebaldi: /* What is DAO? */

2022-08-20T13:10:52Z

What is DAO?

← Older revision		Revision as of 13:10, 20 August 2022
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	Written by Alireza Aghaee Shahrbabaki, PhD student at Bocconi University, Milan.		Written by Alireza Aghaee Shahrbabaki, PhD student at Bocconi University, Milan.

	==What is DAO?==		==What is a DAO?==
	A Decentralized Autonomous Organization, DAO hereafter, is an organization that automates its operations. The DAOs’ rules and transactions are maintained on a blockchain, which promotes information transparency among stakeholders, while smart contract's code controls the implementation of the DAOs’ regulations.		A Decentralized Autonomous Organization, DAO hereafter, is an organization that automates its operations. The DAOs’ rules and transactions are maintained on a blockchain, which promotes information transparency among stakeholders, while smart contract's code controls the implementation of the DAOs’ regulations.

Tebaldi: /* Economics of information and the DAO */

2022-08-20T13:10:20Z

Economics of information and the DAO

← Older revision		Revision as of 13:10, 20 August 2022
Line 43:		Line 43:
	Classic agency theory depicts an ideal scenario in which a single “entrepreneur-manager" makes optimal choices and then implements them, functioning as both principle and agent for his benefit. If there is a separation between ownership and management, agents will pursue their own interests independent from the interests of the principals in the absence of proper incentives (Fama and Jensen, (1983)<ref name="famajensen">Fama, E. F. and Jensen, M. C. (1983). Separation of ownership and control. The Journal of Law and Economics, 26(2):301–325.</ref>; Shapiro, (2000)<ref name="shapiro">Shapiro, S. P. (2005). Agency theory. Annual Review of Sociology, 31(1):263–284.</ref>). The DAO suggests a “next-best-case" of Agency Theory, in which numerous entrepreneur-managers have no need to trust one another but can nonetheless act as a single-minded entrepreneur-manager (Morrison et al., (2020)<ref>Morrison, R., Mazey, N. C. H. L., and Wingreen, S. C. (2020). The dao controversy: The case for a new species of corporate governance? Frontiers in Blockchain, 3.</ref>). Because the blockchain became the vehicle for managing trust, players don’t have to trust anybody else except the system.		Classic agency theory depicts an ideal scenario in which a single “entrepreneur-manager" makes optimal choices and then implements them, functioning as both principle and agent for his benefit. If there is a separation between ownership and management, agents will pursue their own interests independent from the interests of the principals in the absence of proper incentives (Fama and Jensen, (1983)<ref name="famajensen">Fama, E. F. and Jensen, M. C. (1983). Separation of ownership and control. The Journal of Law and Economics, 26(2):301–325.</ref>; Shapiro, (2000)<ref name="shapiro">Shapiro, S. P. (2005). Agency theory. Annual Review of Sociology, 31(1):263–284.</ref>). The DAO suggests a “next-best-case" of Agency Theory, in which numerous entrepreneur-managers have no need to trust one another but can nonetheless act as a single-minded entrepreneur-manager (Morrison et al., (2020)<ref>Morrison, R., Mazey, N. C. H. L., and Wingreen, S. C. (2020). The dao controversy: The case for a new species of corporate governance? Frontiers in Blockchain, 3.</ref>). Because the blockchain became the vehicle for managing trust, players don’t have to trust anybody else except the system.

	Tinn<ref>Tinn, Katrin, 'Smart' Contracts and External Financing (October 2018). Available at SSRN: http://dx.doi.org/10.2139/ssrn.3072854</ref> (2018) observes that the blockchain technology makes it possible to design financing contracts that are based on reliable and up-to-date records of transactions and develops a theoretical model that uses dynamic contract theory to derive optimal financing contracts in this new environment. In line of principle, a DAO might be financed relying on these alternative financing contracts but their optimal use cannot be characterized without a precise extension of the theory of property rights to rule ~~unforeseen contingencies~~ that might arise in the presence of ~~some ambiguity arising~~ from coding weaknesses, as ~~for example~~ it happened in the famous case of "The DAO"<ref>See https://www.atlantafed.org/cenfis/publications/notesfromthevault/1607</ref> .		Tinn<ref>Tinn, Katrin, 'Smart' Contracts and External Financing (October 2018). Available at SSRN: http://dx.doi.org/10.2139/ssrn.3072854</ref> (2018) observes that the blockchain technology makes it possible to design financing contracts that are based on reliable and up-to-date records of transactions and develops a theoretical model that uses dynamic contract theory to derive optimal financing contracts in this new environment. In line of principle, a DAO might be financed relying on these alternative financing contracts but their optimal use cannot be characterized without a precise extension of the theory of property rights. For example, it is necessary to rule the renegotiation issues that might arise in the presence of DAO distress. These renegotiation issues are relevant to clearly define stakeholder rights in the presence of ambiguities that might arise, for example, from coding weaknesses as it happened in the famous case of "The DAO"<ref>See https://www.atlantafed.org/cenfis/publications/notesfromthevault/1607</ref>.

	== Bibliography ==		== Bibliography ==
	<references />		<references />

Tebaldi: /* What is DAO? */

2022-08-20T12:57:42Z

What is DAO?

← Older revision		Revision as of 12:57, 20 August 2022
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	Written by Alireza Aghaee Shahrbabaki, PhD student at Bocconi University, Milan.		Written by Alireza Aghaee Shahrbabaki, PhD student at Bocconi University, Milan.

	=What is DAO?=		==What is DAO?==
	A Decentralized Autonomous Organization, DAO hereafter, is an organization that automates its operations. The DAOs’ rules and transactions are maintained on a blockchain, which promotes information transparency among stakeholders, while smart contract's code controls the implementation of the DAOs’ regulations.		A Decentralized Autonomous Organization, DAO hereafter, is an organization that automates its operations. The DAOs’ rules and transactions are maintained on a blockchain, which promotes information transparency among stakeholders, while smart contract's code controls the implementation of the DAOs’ regulations.

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	DAO may be used to do a wide variety of purposes. A DAO may be used to construct a virtual entity that acts as a crowd-funding platform, a ride-sharing platform, a completely automated firm, or a fully automated decision-making mechanism, among other things. It is critical to recognize that a DAO is not a specific business model or organization but rather a term that may relate to a broad range of things.		DAO may be used to do a wide variety of purposes. A DAO may be used to construct a virtual entity that acts as a crowd-funding platform, a ride-sharing platform, a completely automated firm, or a fully automated decision-making mechanism, among other things. It is critical to recognize that a DAO is not a specific business model or organization but rather a term that may relate to a broad range of things.

	Classic agency theory depicts an ideal scenario in which a single “entrepreneur-manager" makes optimal choices and then implements them, functioning as both principle and agent for his benefit. If there is a separation between ownership and management, agents will pursue their own interests independent from the interests of the principals in the absence of proper incentives (Fama and Jensen, (1983)<ref name="famajensen">Fama, E. F. and Jensen, M. C. (1983). Separation of ownership and control. The Journal of Law and Economics, 26(2):301–325.</ref>; Shapiro, (2000)<ref name="shapiro">Shapiro, S. P. (2005). Agency theory. Annual Review of Sociology, 31(1):263–284.</ref>). The DAO suggests a “next-best-case" of Agency Theory, in which numerous entrepreneur-managers have no need to trust one another but can nonetheless act as a single-minded entrepreneur-manager (Morrison et al., (2020)<ref>Morrison, R., Mazey, N. C. H. L., and Wingreen, S. C. (2020). The dao controversy: The case for a new species of corporate governance? Frontiers in Blockchain, 3.</ref>). Because the blockchain became the vehicle for managing trust, players don’t have to trust anybody else except the system.

	The Ethereum blockchain gave birth to the Ethereum virtual machine (EVM), which can be used to run various decentralized applications (dAPPs) on top of it. These dApps incorporate advanced smart contracts, which might be produced by developers outside the Ethereum core team, extending the technology’s reach. In this sense, a DAO can be regarded as a complex dynamic collection of different but interwoven smart contracts. Since the introduction of Ethereum, a seemingly unending stream of dApps have been created, many of which have their own native unit, often referred to as cryptotokens or appcoins (Burniske and Tatar (2018))<ref>Burniske, C. and Tatar, J. (2018). Cryptoassets: The innovative investor’s guide to bitcoin and beyond. McGraw-Hill Education New York.</ref>). While Ethereum blockchain seems to be the most popular platform for dApps and hence DAOs, many other DAOs work on different blockchains. For instance, Rootstock, a host for smart contracts, runs on the Bitcoin blockchain.		The Ethereum blockchain gave birth to the Ethereum virtual machine (EVM), which can be used to run various decentralized applications (dAPPs) on top of it. These dApps incorporate advanced smart contracts, which might be produced by developers outside the Ethereum core team, extending the technology’s reach. In this sense, a DAO can be regarded as a complex dynamic collection of different but interwoven smart contracts. Since the introduction of Ethereum, a seemingly unending stream of dApps have been created, many of which have their own native unit, often referred to as cryptotokens or appcoins (Burniske and Tatar (2018))<ref>Burniske, C. and Tatar, J. (2018). Cryptoassets: The innovative investor’s guide to bitcoin and beyond. McGraw-Hill Education New York.</ref>). While Ethereum blockchain seems to be the most popular platform for dApps and hence DAOs, many other DAOs work on different blockchains. For instance, Rootstock, a host for smart contracts, runs on the Bitcoin blockchain.

			== Some examples of DAO ==
	Speaking about DAOs, one should be cautious to avoid mistaking DAO as an umbrella term to refer to all Decentralized Autonomous Organizations with “The DAO," which was the first DAO established in 2016 on the Ethereum blockchain. The DAO has an informative story behind it that led to the creation of the Ethereum classic. In a nutshell, Only two months after its introduction, a hacker exploited a flaw in the code of The DAO and stole 3.6 million ether, which was valued at roughly $70 million at the time.		Speaking about DAOs, one should be cautious to avoid mistaking DAO as an umbrella term to refer to all Decentralized Autonomous Organizations with “The DAO," which was the first DAO established in 2016 on the Ethereum blockchain. The DAO has an informative story behind it that led to the creation of the Ethereum classic. In a nutshell, Only two months after its introduction, a hacker exploited a flaw in the code of The DAO and stole 3.6 million ether, which was valued at roughly $70 million at the time.

	Despite the early mishap, DAOs have continued to proliferate. Some DAOs are in charge of stable coins like DAI (managed by MakerDAO), which is tied to the US dollar. Owners of tokens vote on how interest rate mechanisms function that helps keep the price stable and fine-tune supply and demand. Some others such as SpiceDAO buy tangible assets. Another group of DAOs such as PleasrDAO, speculate on cryptocurrencies and non-fungible tokens (NFTs). Many DAOs seem to have been created to handle wagers in a virtual casino like Augur. The following table lists a few other famous DAOs.		Despite the early mishap, DAOs have continued to proliferate. Some DAOs are in charge of stable coins like DAI (managed by MakerDAO), which is tied to the US dollar. Owners of tokens vote on how interest rate mechanisms function that helps keep the price stable and fine-tune supply and demand. Some others such as SpiceDAO buy tangible assets. Another group of DAOs such as PleasrDAO, speculate on cryptocurrencies and non-fungible tokens (NFTs). Many DAOs seem to have been created to handle wagers in a virtual casino like Augur. The following table lists a few other famous DAOs.

	~~+Some~~ DAO instances		In the following table we list some examples of DAO instances
	{\| class="wikitable"		{\| class="wikitable"
	!Name!!Token!!Use cases!!Network!!Launch!!Status		!Name!!Token!!Use cases!!Network!!Launch!!Status
Line 40:		Line 40:
	\|}		\|}

			== Economics of information and the DAO ==
			Classic agency theory depicts an ideal scenario in which a single “entrepreneur-manager" makes optimal choices and then implements them, functioning as both principle and agent for his benefit. If there is a separation between ownership and management, agents will pursue their own interests independent from the interests of the principals in the absence of proper incentives (Fama and Jensen, (1983)<ref name="famajensen">Fama, E. F. and Jensen, M. C. (1983). Separation of ownership and control. The Journal of Law and Economics, 26(2):301–325.</ref>; Shapiro, (2000)<ref name="shapiro">Shapiro, S. P. (2005). Agency theory. Annual Review of Sociology, 31(1):263–284.</ref>). The DAO suggests a “next-best-case" of Agency Theory, in which numerous entrepreneur-managers have no need to trust one another but can nonetheless act as a single-minded entrepreneur-manager (Morrison et al., (2020)<ref>Morrison, R., Mazey, N. C. H. L., and Wingreen, S. C. (2020). The dao controversy: The case for a new species of corporate governance? Frontiers in Blockchain, 3.</ref>). Because the blockchain became the vehicle for managing trust, players don’t have to trust anybody else except the system.

			Tinn<ref>Tinn, Katrin, 'Smart' Contracts and External Financing (October 2018). Available at SSRN: http://dx.doi.org/10.2139/ssrn.3072854</ref> (2018) observes that the blockchain technology makes it possible to design financing contracts that are based on reliable and up-to-date records of transactions and develops a theoretical model that uses dynamic contract theory to derive optimal financing contracts in this new environment. In line of principle, a DAO might be financed relying on these alternative financing contracts but their optimal use cannot be characterized without a precise extension of the theory of property rights to rule unforeseen contingencies that might arise in the presence of some ambiguity arising from coding weaknesses, as for example it happened in the famous case of "The DAO"<ref>See https://www.atlantafed.org/cenfis/publications/notesfromthevault/1607</ref> .

			== Bibliography ==
	<references />		<references />