Economic DAO Governance: A Contestable Control Approach

In this article, we propose a new form of DAO governance that uses a sequential auction mechanism to overcome entrenched control issues that have emerged for DAOs by creating a regime of temporary contestable control. The mechanism avoids potential public choice problems inherent in voting approaches but at the same time provides a vehicle that can enhance and secure value that inheres to DAO voting and other DAO non-market governance procedures. It is robust to empty voting and is code-feasible. It facilitates the ability of DAOs to meet their normative and operational goals in the face of diverse regulatory approaches. Designed to shift control to the party with the most promising business plan, at the same time it distributes social surplus in a way that tends to promote investment by other parties.