With Darcy W.E. Allen, Aaron M. Lane and Jason Potts. Published in Kevin Werbach and Nicolas Cornell (eds), Foundations of Decentralized Organizations: Blockchain and the Future of Corporate Law, Oxford University Press, 2026.
Abstract: We develop a theory of decentralized autonomous organizations (DAOs) that explains why they exist in terms of what they do. In New Institutional Economics, firms exist to minimise the transaction costs of using a market. DAOs, which are a species of firm made of smart contracts, seem to extend this logic. But by observing how DAOs behave in the wild—through cases such as ShapeShift, Uniswap and Optimism—we reveal that the core value of a DAO is its capacity for dynamic adaptation in governance. DAOs enable fast, low-cost changes in governance in response to shifting regulatory, financial and competitive conditions. They are mechanisms for organisational variation in governance itself. When the benefits of this adaptive mechanism exceed its costs, we predict the existence of a DAO.
Available at Oxford Academic.