Decentralized autonomous organizations in the public sector
Opportunities and risks
O.K. Rikken (TU Delft - Information and Communication Technology)
M.F.W.H.A. Janssen (TU Delft - Engineering, Systems and Services)
Z. Roosenboom-Kwee (TU Delft - Economics of Technology and Innovation)
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Abstract
Decentralized autonomous organizations (DAOs) are one of the most advanced blockchain-based applications. DAOs offer democratic participation in decision-making for their users, without needing traditional hierarchical reporting and management structures, through the autonomous execution of decisions through smart contracts. These characteristics have driven exponential growth in DAO projects over recent years. Their inherent democratic features make them well-suited for the public sector. Being transparent, DAOs align well with public values, such as direct democracy, privacy, and openness. In the public sector, DAOs provide opportunities to improve the internal democracy of existing government bodies, increase citizen participation, enhance ownership and management of public goods (commons), and support the development of decentralized political parties, some of which are already being experimented with. While DAOs present many opportunities for the public sector, a robust governance design is crucial to mitigate potential risks when using DAOs.