Publication: Working Paper Series No. 161

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Decentralised Autonomous Organizations: Targeting the Potential Beyond the Hype by Oscar Borgogno  (Bank of Italy) and Edoardo D. Martino (University of Amsterdam and EBI) was published on 12 January 2024 in the EBI Working Paper Series No. 161.

Decentralised Autonomous Organisations (DAOs) aim at innovating the organization forms for business activities. They are complex blockchain-based smart contracts, which allow token holders to participate directly in decision making processes and decentralised entrepreneurial activities as much as possible.

The advocates of this new kind of digital organization argue that DAOs enjoy significant operational efficiencies and can effectively work outside of any legal recognition. This paper analyses DAOs through the lenses of the economic and legal theories on the firm and on business organization. The analysis makes three contributions: first, it contributes to the literature on the theory of the firm, looking at the role of digital technology in innovating the organization of business activities. Second, it enriches the literature on the legally recognised forms of business organization, analysing the tension between the essential role of the law and the limitations of tamper-resistant technologies, such as the blockchain. Third, it overcomes the largely ideological and dichotomic debate on the promises of DAOs, providing analytical guidelines as to why current forms of sector-specific regulation fail to leverage the potential of DAOs.

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