Mitigating Agency Conflicts with DAOs

Abstract

Decentralized Autonomous Organizations (DAOs) introduce a novel approach to Corporate Gov-ernance with the potential to alleviate longstanding agency conflicts while enhancing transpar-ency, accountability, and efficiency. This Master’s thesis delves into the unique characteristics of DAOs, such as decentralization, transparency, consensus-based decision-making, and their capacity to mitigate agency conflicts within corporate structures. The research reveals the trans-formative potential of DAOs in revolutionizing Corporate Governance by aligning stakeholder interests, reducing opportunistic behavior, and automating rule enforcement. The cornerstone of this research is the development and evaluation of a comprehensive con-ceptual model for designing DAO governance systems that address agency conflicts. Developed and assessed through Design Science Research, this model is structured into four tiers: Key Char-acteristics, Governance Dimensions, Indicators, and Agency Conflicts. The model incorporates additional elements such as Advantages, Best Practices, and Design Options, providing a holistic understanding of DAOs. The model's practicality and usability are enhanced by quantifiable in-dicators, which reflect the effectiveness of governance dimensions in mitigating agency con-flicts. This conceptual model serves as a valuable guide for organizations considering the adoption of decentralized governance structures, contributing to the evolution of Corporate Governance in the era of decentralization.