THE FOUNDERS OF A DAO

Role and activity

The founders of a Decentralized Autonomous Organization (DAO) are involved in the process of its establishment. Mainly, they are in charge of drafting the so-called "white paper" containing the rules and objectives of the organization, which is published on the web, particularly on social media, in order to present the idea behind the entity and attract investors. The latter, if interested, can join the proposal by contributing cryptocurrencies, receiving tokens issued by the organization in return.

Moreover, they "usually are the initial developers of the smart contract-based protocol", who then "transfer ongoing decision-making to the software's users and supporters".

While, in theory, the procedure of establishing the DAO and distributing its control among those who decide to believe in the initiative appears fully democratic, it has been found in practice to be an unequal takeover phenomenon. In this sense, the founders, together with the early entrants to the system, purchase large quantities of tokens at a cost approaching zero, with the aim of subsequently increasing their price through the management of the DAO, and then trading them on the secondary market and profiting from the difference.

Lastly, the founders are responsible for opening up the open source code of the blockchain and smart contracts underlying the DAO in order to promote forms of collaboration in software development with any interested developers.

References

• R. Piselli, Quando la decentralizzazione delle DLT incontra il mercato dei capitali. Appunti sulle organizzazioni decentralizzate, in AGE, 2019, p. 373 ss.
• C. Santana, L. Albareda, Blockchain and the emergence of Decentralized Autonomous Organizations (DAOs): An integrative model and research agenda, in Technological Forecasting & Social Change, 2022, p. 3.
• O. Borgogno, Making decentralized autonomous organizations (DAOs) fit for legal life: mind the gap, Questioni di Economia e Finanza by Banca d'Italia, 2022, p. 8.