Unpacking How Decentralized Autonomous Organizations (DAOs) Work in Practice

Decentralized Autonomous Organizations (DAOs) have emerged as a novel way to coordinate a group of (pseudonymous) entities toward a shared vision (e.g., promoting sustainability). In just a few years, over 4,000 DAOs have been launched in various domains, such as investment, education, health, and research. Despite such rapid growth and diversity, it is unclear how these DAOs actually work in practice. Given this, we aim to unpack how (well) DAOs work in practice. We conducted an in-depth analysis of a diverse set of 10 DAOs of various categories and smart contracts, leveraging on-chain data and interviewing DAO members. Specifically, we define metrics to characterize key aspects of DAOs, such as the degrees of decentralization and autonomy. We observed some DAOs having poor decentralization in voting, while decentralization has improved over time for one-person-one-vote DAOs. Lastly, we offer a set of design implications for future DAOs based on our findings.