Hindered On All Sides: Why The Usefulness Of Decentralised Autonomous Organisations Remains Limited

Abstract

Decentralised autonomous organisations (DAOs) were presented as a revolutionary organisational structure capable of connecting global communities despite their location, creed or statehood. However, the structure remains used almost exclusively in blockchain-based applications. This article explains why DAOs remain confined to that niche by exploring the obstacles facing the structure. It breaks these obstacles into two categories; those posed by unsatisfactory legal environments and those posed by DAOs use of Lex Cryptographia. It argues that regulatory uncertainty and a lack of novel legal recognition make using a DAO within existing legal environments untenable. Furthermore, those DAOs that seek to avoid these legal obstacles by operating via the private regulatory frameworks of Lex Cryptographia alone face additional challenges. The imposition of pseudonymity, no access to existing capital markets and vulnerabilities in token holder governance all hinder DAOs further. This article analyses these various obstaclesand asserts that they explain DAO's limited use.