Follow my twitter : twitter.com/0xjingle

With the rapid development of information technology, such as smart contract on the blockchain, the concept of DAO is emerging and attracting intensive attention (Wang et.al, 2019). However, there is very little literature on the empirical research of these new arising decentralized organizations.

Traditional organization theory has a huge number of literature on decentralized organizations of different types. Shubik (1962) discusses the decentralized control in management; Beckhard (1966) introduced an organization improvement program in a medium-sized decentralized organization. Freeland and Baker (1975) present a mathematical model of the resource allocation decision process in decentralized organizations. The model is capable to present a wide range of behavioral situations.

Surprisingly, it is until very recently, Dilger (1997) presents the principles of intelligent home technology modeled by a multi-agent system (MAS). The concept of DAO is initially used to describe such systems in an internet-of-thing (IoT) environment.

DAO, the decentralized autonomous organization, or DAC, known as the decentralized autonomous cooperation, is the newest phenomenon and concept in the new economy, together with the WEB 3.0, metaverse and NFT etc. The Nobel Prize 2009 of economic winner Elinor Ostrom contributes to the literature on how common property can be successfully managed by user association. Common ownership is considered as bad idea traditionally:” Owned by all is cared for by none”, while Ostrom’s research demonstrates that ordinary people are capable of creating rules and institutions that allow of the sustainable and equitable management of shared resources. Her theory of the “organization of cooperation” provides the fundamental theorical frameworks for the DAO/DAC.

Current literature of DAO is more descriptive and from the introductions perspective. Kirillov (2021) describes the DAO as the new form of doing business in digital economy and the most advanced form of joint business in the globalization era. Wang et al. (2019) present a systematic introduction of the DAO including the concept, characteristics, research frameworks, typical implementations, challenges and future trends. A 5-layers research framework of the DAO is proposed.

Faqir-Rhazoui et al.(2021) do a comparative analysis of the platforms for DAO in the Ethereum chain and find a rapid growth in the DAO communities. Their research includes the four dimensions as growth, activities, voting system and funds.

Jentzsch (2016) presents an automate organizational governance and decision-making system, to solve the ‘majority robs minority attack ’ problem. This system ideally protects the minority to retrieve their portion of the funds once they are against the proposal. The smart contract is configured to allow the DAO to split into two.

Kondova and Barba ( 2019 ) shows a study of the DAO governance structure by using the OECD corporate governance principle on disclosure and transparency. They further argue the application of DAO and self-executing smart contract could ensure the transparency of the corporate governance.

Pan and Deng (2021) develop an incentive mechanism based on the mutual insurance scenario for DAO. They raise the question of how to manage the virtual organizations and establish a market mechanism of fair competition ,maximize cooperation and prevent monopoly operation. They further discuss by the literature of Casari and Claudio (2018) that the upper limit of community size is 150 people. Following the Dunbar structure (Guidi et al , 2021) , the online DAO community with no more than 40 people can be managed democratically but with more than 40 people need a leadership team structure.

Hawlitschek et al. ( 2020 ) suggest the three common misconception on the blockchain applicability to the sharing economy. The trust-free fallacy , the disintermediation fallacy and the consumer will fallacy. They argue that the nature of interaction involving the beliefs and intentions of human beings implies a need of trust. And this will not be replaced by any of the upgrades of technology. The trust-free, disintermediation, and consumer will fallacies could be the potential starting points for research on the potential and limits of blockchain technology, as well as DAO .

Dwivedi et al. (2021) believe the blockchain and smart contract as a technology are able to enhance the effectiveness and automation of business process. The rising of DAO has the potential to reform the business and society.

Hsieh et.al (2018) describe the bitcoin as the first real-world implementation of DAO. They compared the bitcoin with the traditional banks and the open-source software development (OSSD).They further conclude the DAO could have a lot applications inside the traditional organizations as well as the toolkit for the future research. As a summary of the literatures, DAO is still at a very early stage and new development. The literatures of DAO are limited and most of them are introductive. As a new interdisciplinarity phenomenon crossing the computer science , information technology , cryptology ,management and economics ,it is worth to pay further attention from the perspectives from management and economics .

Here are some of my observations: 1, There is no doubt that the new technologies play a crucial role in the growth and development. Blockchain and smart contract are one of those frontier technologies in the new digital economy. It could bring some revolution changes to the tradition society.

Though Hawlitschek et al. ( 2020 ) suggest the three common misconception , it still worth to explore the potential impact of how the new technology changes the world. Generally I agree that trust is something fundamental inside the human interaction . The idea of trust-free world by blockchain or smart contract is still attractive and interesting .When the boundary of the blockchain enlarges ,the applications of trust-free are also be extended. So slogan of ‘Don’t Trust, Verify’ could be the new definition of trust in future;

2, I are not sure that whether DAO could be the form of next generation of cooperation. According to Coase (1937) , the firm is theoretically defined by his transaction cost theory. Whether DAO has an advantage in transaction cost comparing to the tradition cooperation is still under exploration.

One hand, by using the smart contract and other information technologies, DAO is likely to have high efficiency on the decision making and the tools of tokenization is a big challenge to the traditional finance cooperation. The higher efficiency could mean the lower transaction cost and it has the advantage to become a new form of cooperation.

On the other hand, DAO as innovated thing, has challenges such as the unclear legal status. At present, the DAO has not been clearly defined at legal level. A term of general partnership is used between the DAO and its investors sometime, but still it could be some legal issues in practice. The DAO participants are likely not protected under the current legal system. (Wang et al. ,2019)

The technical has its limitations as well. Although DAO yearns for Code is law or regulation by code, it is difficult to implement in real life. Our world is so diversified and complicated, and some of them are not able to be translated to rules and coded.

3, Unless all the members are well educated and share the common consensus, It is very likely the current issues in organization behaviors exist inside the DAO as same as the other traditional organization.

Take the ‘free rider’ for example, free rider is common and usual inside an organization. Abasolo and Tsuchiya (2014) do an empirical investigation of free ride problem in the blood donation system. Assis et. al ( 2020) discuss a free-rider prevention mechanism by using the cloud computing.

It is also a very common issue in the world of DAO and is harmful to DAO community building as well. As my observation in the current DAO communities, the relationship between the DAO members are loose connections and less emphasis on the punishment of free-ride issue. The lack of the prevention mechanism of free-riders, is likely to encourage the community with people who are good as ‘薅羊毛’ .This will lead to an economic effect of Gresham’s Law, the bad money drives out good.

4, DAO could be a useful tool for the academic research as well. By the nature, DAO is a community where data can be generated , knowledge can be shared and social experiments can be observed and measured . Take policy analysis for example , I might take years or decades to collect the data and do the empirical test .However by blockchain, We can translate a policy into the codes and observe how people react to the policy and other person from time to time, observe and record the data on chain. It’s kind of simulation of the policy in a short period of time.

Page and Elmessiry (2021) describe a framework for the GR-DAO ,global research dao. They believe that scientific/academic research could also be decentralized and a research DAO could have a profound impact on the research community both academically and commercially. They further present the social design of the GR-DAO including the mission, legal consideration, dao game theory and resilience etc. \

It could be interesting to see the future scientific or academic research being carried out by the format of DAO , funded by DAO , participated by DAO members and contribute the research outcome back to DAO. 5, Since it is the very early stage of DAO, there is a rapid growth in the quantities of DAO organization. However, some of them started to die out. To study why DAO fail is another interesting topic to me instead of why DAO success.

The collect the on chain and off chain data from DAOs and understand what is the key determinants contributing to the die out of the DAO. This could further help with how to build the DAO community.

6, Case Study

There are different types of DAO in the space and in this case study section, I choose the most recently typical and influential DAO, by using the 5-layer frameworks introduced by Wang et al. (2019).

Constitution / People DAO: Constitution DAO is self-declared as one of the single purpose DAOs formed in Nov.2021. The purpose of the DAO is to raise a certain amount of money ie. 40m US dollars, participate in the auction of Sotheby and buy the rare copy of Constitution of the United States, which is one of 13 remaining copies of the official edition of the constitution. The group leaders promised to turn the rare copy over to a formal non-profit run by the DAO’s donors if they successfully win the bids.

The story is quite dramatic. The DAO quickly became a the most prominent example of DAO in the social media. In 7 days ,the DAO treasury raised a crypto currency named Ethereum worthy of a total amount of 42 million us dollars. The DAO successfully passed the fund verification of Sotheby auction but failed to win the auction at last mint. So the team decided to dissolve the community and return back the crowdfunded funds fully.

All these mechanisms are designed by the smart contract deployed on the blockchain. The initial team has around 30 members who are non-anonymous. They set up a DAO treasury which is multi-signed by different team members, which is quite common in an organization of DAO. They use the Juicebox accept the donation of Ethereum. The donation of every 1 ethereum ( $eth ) worth of 3000 US dollars can be rewarded of 1 million people tokens, which is designed as the governance token in the Constitution DAO. The $people token has the voting power in the DAO proposal at the amount basis, the more token you hold , the more voting power you have. And when the DAO failed to purchase the rare copy of the constitution, two actions have been taken :one is the $people token holder can exchange back to ethereum at the same exchange rate ; the other one is the multi-signed team members “burned” which mean give up the control power on the treasury , which mean the 45 million dollar worth ethereum token is permanently locked on the treasury and no one have control on it ,except the $people token holders return back the token and exchange back the ethereum token which they initially put into the wallet.

Here is the summary of the Constitution DAO by the 5 layers analysis framework proposed by Wang et al. (2019).

As a conclude of the above analysis, the purpose of Constitution DAO is clear and the mechanism is simple as well. The application of the smart contract makes the whole process transparent and successful. It is a typical DAO form that the major rules are executed by the code, though the offline activities such as communications, fund verification by Sotheby’s and bidding activities during the auctions are still executed by the person.

A very interesting phenomenon is, up to the date, the treasury of the constitution DAO still have 5100 $eth locked in the wallet worth of 11.6 million USD. Why it is easy to get the fund in, but so difficult to return the money back? One possible answer could be the price of $people token in the secondary market is 15 times higher than the initial allocation price. So the $people token holders are trading out the token at a higher price in the secondary market. But on the other hand, some of the $people token holders are continually redeeming their token back at Juicebox for the lower price. This is quite puzzling that people choose to exchange the token at lower ratio rather than a higher price at the secondary market. Potential explanations including that people have a faith on the Constitution or they are intended to technically redeem and burn the token so the total supply of the $people token can be reduced. It worth a further research on this interesting observations : easy to get fund in, but difficult to reture and the behaviors of selling the token at lower price.

Upto the date of writing this essay, the current total market value of $People is worth 220 million USD according to the data from the exchange market. The Constitution DAO demonstrates how the currencies are created from nothing. This is also interesting that when a DAO is physically dissolved , the governance token are still in the market and have a value.The so-called MEME culture is also quite interesting area to look into.

Similar to the Constitution DAO, there are some other so-called DAOs have a clear mission , such as MoonDAO, which has a mission of sending a civilian into the space ; Assange DAO has a mission of fighting of the freedom of Julian Assange.

To make the case study as a full picture, I will briefly introduce the other DAOs which is community-based DAO, Cult DAO.

Cult DAO: A very recent investment DAO focusing on the Venture Capital investment. The total capital market of the governance token $cult is about 200 milllion usd dollars. They adopted an interesting economy deflation model of the governance token . Basically Cult DAO denote its top 100 token holder as the guardians of the DAO , and they have the right to nominate a proposal for the public holder to vote. But the guardians according to the rules, they are not able to vote to avoid the interest conflicts. Then the other token holders can vote on the proposals of the potential projects . Once the proposal is passed and the smart contract will transfer a certain amount of eth to the target projects in exchange of its own token. The exchange of token and the implements is fully done by the smart contract and purely automatic. The governance structure of cult is interesting and is similar to the ancient Venice .

As a conclsion to this essay, DAO is a very new phenomenon and we know little about it yet. I got around 866 results when searching on Mendeley database by using ‘decentralized autonomous organizations’ as the keywords. Most of the results are descriptive and introductions to the question of ‘What is a DAO’ . As the management and operation rules of DAO are all encoded on blockchain, DAO is seen as a subversion of the traditional hierarchical management model. DAO has many potentials worth a further study.

Abásolo, I., & Tsuchiya, A. (2014). Blood donation as a public good: An empirical investigation of the free rider problem. European Journal of Health Economics, 15(3). https://doi.org/10.1007/s10198-013-0496-x

Assis, M. R. M., & Bittencourt, L. F. (2020). MultiCloud Tournament: A cloud federation approach to prevent Free-Riders by encouraging resource sharing. Journal of Network and Computer Applications, 166. https://doi.org/10.1016/j.jnca.2020.102694

B. Guidi, A. Michienzi, L. Ricci et al., “Analysing dunbar circles in Facebook groups,” in Proceedings of the 2021 IEEE 18th Annual Consumer Communications & Networking Conference (CCNC), pp. 1–6, Las Vegas, NV, USA, January 2021.

Coase, R. H. (1937). The Nature of the Firm. Economica, 4(16). https://doi.org/10.1111/j.1468-0335.1937.tb00002.x

Faqir-Rhazoui, Y., Arroyo, J., & Hassan, S. (2021). A comparative analysis of the platforms for decentralized autonomous organizations in the Ethereum blockchain. Journal of Internet Services and Applications, 12(1). https://doi.org/10.1186/s13174-021-00139-6

F. Hawlitschek, B. Notheisen, and T. Teubner, “A 2020 perspective on “The limits of trust-free systems: a literature review on blockchain technology and trust in the sharing economy,” Electronic Commerce Research and Applications, vol. 40, Article ID 100935, 2020.

Hassan, S., & de Filippi, P. (2021). Decentralized autonomous organization. Internet Policy Review, 10(2). https://doi.org/10.14763/2021.2.1556

Hsieh, Y.-Y. (2018). The Rise of Decentralized Autonomous Organizations: Coordination and Growth within Cryptocurrencies Recommended Citation. In Electronic Thesis and Dissertation Repository (Issue June).

Jentzsch, C. (2016). Decentralized Autonomous Organization to Automate Governance. SlockIt.

Kirillov, D. v. (2021). Decentralised Autonomous Organisations as a New Form of Doing Business in the Digital Economy. Humanities and Social Sciences. Bulletin of the Financial University, 11(2). https://doi.org/10.26794/2226-7867-2021-11-2-30-34

L. Page, K., & Elmessiry, A. (2021). Global Research Decentralized Autonomous Organization (GR-DAO): A DAO of Global Researchers. https://doi.org/10.5121/csit.2021.111708

M. Casari and C. Tagliapietra, “Group size in social-ecological systems,” Proceedings of the National Academy of Sciences of the United States of America, vol. 115, no. 11, pp. 2728–2733, 2018.

Wang, S., Ding, W., Li, J., Yuan, Y., Ouyang, L., & Wang, F. Y. (2019). Decentralized Autonomous Organizations: Concept, Model, and Applications. IEEE Transactions on Computational Social Systems, 6(5). https://doi.org/10.1109/TCSS.2019.2938190

V. Dwivedi, A. Norta, A. Wulf, B. Leiding, S. Saxena and C. Udokwu, "A Formal Specification Smart-Contract Language for Legally Binding Decentralized Autonomous Organizations," in IEEE Access, vol. 9, pp. 76069-76082, 2021, doi: 10.1109/ACCESS.2021.3081926.

Yiguang Pan, Xiaomei Deng, "Incentive Mechanism Design for Distributed Autonomous Organizations Based on the Mutual Insurance Scenario",  Complexity, vol. 2021, Article ID 9947360, 16 pages, 2021. https://doi.org/10.1155/2021/9947360

Follow my twitter : twitter.com/0xjingle

With the rapid development of information technology, such as smart contract on the blockchain, the concept of DAO is emerging and attracting intensive attention (Wang et.al, 2019). However, there is very little literature on the empirical research of these new arising decentralized organizations.

Traditional organization theory has a huge number of literature on decentralized organizations of different types. Shubik (1962) discusses the decentralized control in management; Beckhard (1966) introduced an organization improvement program in a medium-sized decentralized organization. Freeland and Baker (1975) present a mathematical model of the resource allocation decision process in decentralized organizations. The model is capable to present a wide range of behavioral situations.

Surprisingly, it is until very recently, Dilger (1997) presents the principles of intelligent home technology modeled by a multi-agent system (MAS). The concept of DAO is initially used to describe such systems in an internet-of-thing (IoT) environment.

DAO, the decentralized autonomous organization, or DAC, known as the decentralized autonomous cooperation, is the newest phenomenon and concept in the new economy, together with the WEB 3.0, metaverse and NFT etc. The Nobel Prize 2009 of economic winner Elinor Ostrom contributes to the literature on how common property can be successfully managed by user association. Common ownership is considered as bad idea traditionally:” Owned by all is cared for by none”, while Ostrom’s research demonstrates that ordinary people are capable of creating rules and institutions that allow of the sustainable and equitable management of shared resources. Her theory of the “organization of cooperation” provides the fundamental theorical frameworks for the DAO/DAC.

Current literature of DAO is more descriptive and from the introductions perspective. Kirillov (2021) describes the DAO as the new form of doing business in digital economy and the most advanced form of joint business in the globalization era. Wang et al. (2019) present a systematic introduction of the DAO including the concept, characteristics, research frameworks, typical implementations, challenges and future trends. A 5-layers research framework of the DAO is proposed.

Faqir-Rhazoui et al.(2021) do a comparative analysis of the platforms for DAO in the Ethereum chain and find a rapid growth in the DAO communities. Their research includes the four dimensions as growth, activities, voting system and funds.

Jentzsch (2016) presents an automate organizational governance and decision-making system, to solve the ‘majority robs minority attack ’ problem. This system ideally protects the minority to retrieve their portion of the funds once they are against the proposal. The smart contract is configured to allow the DAO to split into two.

Kondova and Barba ( 2019 ) shows a study of the DAO governance structure by using the OECD corporate governance principle on disclosure and transparency. They further argue the application of DAO and self-executing smart contract could ensure the transparency of the corporate governance.

Pan and Deng (2021) develop an incentive mechanism based on the mutual insurance scenario for DAO. They raise the question of how to manage the virtual organizations and establish a market mechanism of fair competition ,maximize cooperation and prevent monopoly operation. They further discuss by the literature of Casari and Claudio (2018) that the upper limit of community size is 150 people. Following the Dunbar structure (Guidi et al , 2021) , the online DAO community with no more than 40 people can be managed democratically but with more than 40 people need a leadership team structure.

Hawlitschek et al. ( 2020 ) suggest the three common misconception on the blockchain applicability to the sharing economy. The trust-free fallacy , the disintermediation fallacy and the consumer will fallacy. They argue that the nature of interaction involving the beliefs and intentions of human beings implies a need of trust. And this will not be replaced by any of the upgrades of technology. The trust-free, disintermediation, and consumer will fallacies could be the potential starting points for research on the potential and limits of blockchain technology, as well as DAO .

Dwivedi et al. (2021) believe the blockchain and smart contract as a technology are able to enhance the effectiveness and automation of business process. The rising of DAO has the potential to reform the business and society.

Hsieh et.al (2018) describe the bitcoin as the first real-world implementation of DAO. They compared the bitcoin with the traditional banks and the open-source software development (OSSD).They further conclude the DAO could have a lot applications inside the traditional organizations as well as the toolkit for the future research. As a summary of the literatures, DAO is still at a very early stage and new development. The literatures of DAO are limited and most of them are introductive. As a new interdisciplinarity phenomenon crossing the computer science , information technology , cryptology ,management and economics ,it is worth to pay further attention from the perspectives from management and economics .

Here are some of my observations: 1, There is no doubt that the new technologies play a crucial role in the growth and development. Blockchain and smart contract are one of those frontier technologies in the new digital economy. It could bring some revolution changes to the tradition society.

Though Hawlitschek et al. ( 2020 ) suggest the three common misconception , it still worth to explore the potential impact of how the new technology changes the world. Generally I agree that trust is something fundamental inside the human interaction . The idea of trust-free world by blockchain or smart contract is still attractive and interesting .When the boundary of the blockchain enlarges ,the applications of trust-free are also be extended. So slogan of ‘Don’t Trust, Verify’ could be the new definition of trust in future;

2, I are not sure that whether DAO could be the form of next generation of cooperation. According to Coase (1937) , the firm is theoretically defined by his transaction cost theory. Whether DAO has an advantage in transaction cost comparing to the tradition cooperation is still under exploration.

One hand, by using the smart contract and other information technologies, DAO is likely to have high efficiency on the decision making and the tools of tokenization is a big challenge to the traditional finance cooperation. The higher efficiency could mean the lower transaction cost and it has the advantage to become a new form of cooperation.

On the other hand, DAO as innovated thing, has challenges such as the unclear legal status. At present, the DAO has not been clearly defined at legal level. A term of general partnership is used between the DAO and its investors sometime, but still it could be some legal issues in practice. The DAO participants are likely not protected under the current legal system. (Wang et al. ,2019)

The technical has its limitations as well. Although DAO yearns for Code is law or regulation by code, it is difficult to implement in real life. Our world is so diversified and complicated, and some of them are not able to be translated to rules and coded.

3, Unless all the members are well educated and share the common consensus, It is very likely the current issues in organization behaviors exist inside the DAO as same as the other traditional organization.

Take the ‘free rider’ for example, free rider is common and usual inside an organization. Abasolo and Tsuchiya (2014) do an empirical investigation of free ride problem in the blood donation system. Assis et. al ( 2020) discuss a free-rider prevention mechanism by using the cloud computing.

It is also a very common issue in the world of DAO and is harmful to DAO community building as well. As my observation in the current DAO communities, the relationship between the DAO members are loose connections and less emphasis on the punishment of free-ride issue. The lack of the prevention mechanism of free-riders, is likely to encourage the community with people who are good as ‘薅羊毛’ .This will lead to an economic effect of Gresham’s Law, the bad money drives out good.

4, DAO could be a useful tool for the academic research as well. By the nature, DAO is a community where data can be generated , knowledge can be shared and social experiments can be observed and measured . Take policy analysis for example , I might take years or decades to collect the data and do the empirical test .However by blockchain, We can translate a policy into the codes and observe how people react to the policy and other person from time to time, observe and record the data on chain. It’s kind of simulation of the policy in a short period of time.

Page and Elmessiry (2021) describe a framework for the GR-DAO ,global research dao. They believe that scientific/academic research could also be decentralized and a research DAO could have a profound impact on the research community both academically and commercially. They further present the social design of the GR-DAO including the mission, legal consideration, dao game theory and resilience etc. \

It could be interesting to see the future scientific or academic research being carried out by the format of DAO , funded by DAO , participated by DAO members and contribute the research outcome back to DAO. 5, Since it is the very early stage of DAO, there is a rapid growth in the quantities of DAO organization. However, some of them started to die out. To study why DAO fail is another interesting topic to me instead of why DAO success.

The collect the on chain and off chain data from DAOs and understand what is the key determinants contributing to the die out of the DAO. This could further help with how to build the DAO community.

6, Case Study

There are different types of DAO in the space and in this case study section, I choose the most recently typical and influential DAO, by using the 5-layer frameworks introduced by Wang et al. (2019).

Constitution / People DAO: Constitution DAO is self-declared as one of the single purpose DAOs formed in Nov.2021. The purpose of the DAO is to raise a certain amount of money ie. 40m US dollars, participate in the auction of Sotheby and buy the rare copy of Constitution of the United States, which is one of 13 remaining copies of the official edition of the constitution. The group leaders promised to turn the rare copy over to a formal non-profit run by the DAO’s donors if they successfully win the bids.

The story is quite dramatic. The DAO quickly became a the most prominent example of DAO in the social media. In 7 days ,the DAO treasury raised a crypto currency named Ethereum worthy of a total amount of 42 million us dollars. The DAO successfully passed the fund verification of Sotheby auction but failed to win the auction at last mint. So the team decided to dissolve the community and return back the crowdfunded funds fully.

All these mechanisms are designed by the smart contract deployed on the blockchain. The initial team has around 30 members who are non-anonymous. They set up a DAO treasury which is multi-signed by different team members, which is quite common in an organization of DAO. They use the Juicebox accept the donation of Ethereum. The donation of every 1 ethereum ( $eth ) worth of 3000 US dollars can be rewarded of 1 million people tokens, which is designed as the governance token in the Constitution DAO. The $people token has the voting power in the DAO proposal at the amount basis, the more token you hold , the more voting power you have. And when the DAO failed to purchase the rare copy of the constitution, two actions have been taken :one is the $people token holder can exchange back to ethereum at the same exchange rate ; the other one is the multi-signed team members “burned” which mean give up the control power on the treasury , which mean the 45 million dollar worth ethereum token is permanently locked on the treasury and no one have control on it ,except the $people token holders return back the token and exchange back the ethereum token which they initially put into the wallet.

Here is the summary of the Constitution DAO by the 5 layers analysis framework proposed by Wang et al. (2019).

As a conclude of the above analysis, the purpose of Constitution DAO is clear and the mechanism is simple as well. The application of the smart contract makes the whole process transparent and successful. It is a typical DAO form that the major rules are executed by the code, though the offline activities such as communications, fund verification by Sotheby’s and bidding activities during the auctions are still executed by the person.

A very interesting phenomenon is, up to the date, the treasury of the constitution DAO still have 5100 $eth locked in the wallet worth of 11.6 million USD. Why it is easy to get the fund in, but so difficult to return the money back? One possible answer could be the price of $people token in the secondary market is 15 times higher than the initial allocation price. So the $people token holders are trading out the token at a higher price in the secondary market. But on the other hand, some of the $people token holders are continually redeeming their token back at Juicebox for the lower price. This is quite puzzling that people choose to exchange the token at lower ratio rather than a higher price at the secondary market. Potential explanations including that people have a faith on the Constitution or they are intended to technically redeem and burn the token so the total supply of the $people token can be reduced. It worth a further research on this interesting observations : easy to get fund in, but difficult to reture and the behaviors of selling the token at lower price.

Upto the date of writing this essay, the current total market value of $People is worth 220 million USD according to the data from the exchange market. The Constitution DAO demonstrates how the currencies are created from nothing. This is also interesting that when a DAO is physically dissolved , the governance token are still in the market and have a value.The so-called MEME culture is also quite interesting area to look into.

Similar to the Constitution DAO, there are some other so-called DAOs have a clear mission , such as MoonDAO, which has a mission of sending a civilian into the space ; Assange DAO has a mission of fighting of the freedom of Julian Assange.

To make the case study as a full picture, I will briefly introduce the other DAOs which is community-based DAO, Cult DAO.

Cult DAO: A very recent investment DAO focusing on the Venture Capital investment. The total capital market of the governance token $cult is about 200 milllion usd dollars. They adopted an interesting economy deflation model of the governance token . Basically Cult DAO denote its top 100 token holder as the guardians of the DAO , and they have the right to nominate a proposal for the public holder to vote. But the guardians according to the rules, they are not able to vote to avoid the interest conflicts. Then the other token holders can vote on the proposals of the potential projects . Once the proposal is passed and the smart contract will transfer a certain amount of eth to the target projects in exchange of its own token. The exchange of token and the implements is fully done by the smart contract and purely automatic. The governance structure of cult is interesting and is similar to the ancient Venice .

As a conclsion to this essay, DAO is a very new phenomenon and we know little about it yet. I got around 866 results when searching on Mendeley database by using ‘decentralized autonomous organizations’ as the keywords. Most of the results are descriptive and introductions to the question of ‘What is a DAO’ . As the management and operation rules of DAO are all encoded on blockchain, DAO is seen as a subversion of the traditional hierarchical management model. DAO has many potentials worth a further study.

Abásolo, I., & Tsuchiya, A. (2014). Blood donation as a public good: An empirical investigation of the free rider problem. European Journal of Health Economics, 15(3). https://doi.org/10.1007/s10198-013-0496-x

Assis, M. R. M., & Bittencourt, L. F. (2020). MultiCloud Tournament: A cloud federation approach to prevent Free-Riders by encouraging resource sharing. Journal of Network and Computer Applications, 166. https://doi.org/10.1016/j.jnca.2020.102694

B. Guidi, A. Michienzi, L. Ricci et al., “Analysing dunbar circles in Facebook groups,” in Proceedings of the 2021 IEEE 18th Annual Consumer Communications & Networking Conference (CCNC), pp. 1–6, Las Vegas, NV, USA, January 2021.

Coase, R. H. (1937). The Nature of the Firm. Economica, 4(16). https://doi.org/10.1111/j.1468-0335.1937.tb00002.x

Faqir-Rhazoui, Y., Arroyo, J., & Hassan, S. (2021). A comparative analysis of the platforms for decentralized autonomous organizations in the Ethereum blockchain. Journal of Internet Services and Applications, 12(1). https://doi.org/10.1186/s13174-021-00139-6

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