Decentralized Blockchain Governance and Transaction Costs in Digital Transformation: The Case of the DAO Revisited

The aim of this study is to examine the efficiency of decentralized autonomous organizations (DAOs) derived from differences in corporate governance structures and transaction costs compared to traditional organizations. Core assumptions on these differences from academic and grey literature are integrated into a model of the governance layers of the innovative socio-technical arrangement that is a DAO. We test this model against the case of “The DAO”, an early experiment in decentralized autonomous organization, which was forced to be stopped after a hacker stole around 50 Million USD in ETH tokens in 2016. The case history and its effects on actors in and outside “The DAO” highlight important aspects to be considered in judging the efficiency of governance structures of DAOs and related transaction costs. Results indicate that especially in situations of crisis, transaction costs rise again and that people are not as far at the margins of the corporate governance as the concept of a DAO proposes.