On the Centralization of Governance Power in Decentralized Autonomous Organizations

2026-04-27

AI Summary

Although decentralized autonomous organizations (DAOs) espouse decentralization and autonomy, their governance power is highly concentrated in practice. This study systematically examines 48 active, high-capital DAOs on Ethereum and reveals, for the first time, that core governance mechanisms—token registration, staking, and delegation—are not neutral design choices but systematically exacerbate voting power concentration. Through empirical, structured analysis of governance smart contracts, the research demonstrates that these mechanisms, while ostensibly implemented to enhance security or participation, consistently reinforce centralization. The findings underscore a fundamental tension among decentralization, security, and usability in DAO governance design.

Abstract

A decentralized autonomous organization (DAO) is a governing entity that empowers its stakeholders (i.e., users who hold one or more of its tokens) to manage blockchain-based protocols (i.e., smart contracts) collaboratively. The governance of a DAO is explicitly encoded in the DAO's governance contract, which defines how stakeholders participate in governance and how much influence (or voting power) they have in any decision. While decentralization and autonomy are the fundamental tenets of a DAO's design, empirical evidence suggests that in practice governance is often highly centralized. In this work, we study the designs and implementations of 48 public and actively used DAOs, with substantially large capital, deployed on Ethereum. We identify how three key governance mechanisms--token registration, staking, and delegation--originally introduced to improve security or participation, contribute to the concentration of voting power. Unlike prior work on centralization of voting power in specific DAOs, our findings reveal that these governance mechanisms of DAOs themselves systematically reinforce centralization. By elucidating the relationship between governance design and voting centralization, this work advances the understanding of DAO governance structures and highlights the inherent trade-offs between decentralization, security, and usability of DAOs.

Problem

• DAO
• governance centralization
• voting power
• decentralization
• blockchain governance

Innovation

• DAO governance
• voting power centralization
• token delegation
• staking mechanism
• decentralization trade-offs