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Making Decentralized Autonomous Organizations (DAOs) fit for legal life: mind the gap

Author

Listed:
  • Oscar Borgogno

    (Bank of Italy)

Abstract

Decentralized Autonomous Organisations (DAOs) can be understood as collective organizations that are run through blockchain-based smart contracts, which allow token holders to participate directly in decision-making processes. By harnessing the key features of distributed ledger technology (DLT), they are increasingly posing tricky questions for policy makers, supervisors, and legal scholars. Even though DAOs are often claimed to be beyond the reach of national jurisdictions, it is clear that a broad array of legal issues need to be solved for DAOs to achieve scalability and widespread application, namely the lack of limitation of liability, governance concerns, and the definition of token-holders’ rights. Our paper delves into these concerns and argues that DAOs can benefit from the solutions provided by corporate law over the past decades in coping with management and moral hazard problems involving all complex organizations.

Suggested Citation

  • Oscar Borgogno, 2022. "Making Decentralized Autonomous Organizations (DAOs) fit for legal life: mind the gap," Questioni di Economia e Finanza (Occasional Papers) 718, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_718_22
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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2022-0718/QEF_718.pdf
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    Cited by:

    1. Guerino Ardizzi & Marco Bevilacqua & Emanuela Cerrato & Alberto Di Iorio, 2023. "Making it through the (crypto) winter: facts, figures and policy issues," Temi di discussione (Economic working papers) 38, Bank of Italy, Economic Research and International Relations Area.
    2. Carlo Gola & Valentina Cappa & Patrizio Fiorenza & Paolo Granata & Federica Laurino & Lorenzo Lesina & Francesco Lorizzo & Gabriele Marcelli, 2023. "The governance of blockchains and system based on distributed ledger technology," Questioni di Economia e Finanza (Occasional Papers) 773, Bank of Italy, Economic Research and International Relations Area.

    More about this item

    Keywords

    blockchain; DAOs; decentralization; corporate governance; tokens;
    All these keywords.

    JEL classification:

    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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