🤖 AI Summary
To address governance rigidity, susceptibility to manipulation, and regulatory inflexibility in DAOs, this paper proposes a dynamic control rights allocation mechanism based on sequential auctions. It replaces static, permanent governance structures with temporary, contestable authority, reallocating control periodically via economic bidding. Theoretical design incorporates game-theoretic incentive compatibility, ensuring airdrop-proof voting, social surplus maximization, and alignment with long-term investment incentives. Fully implementable as auditable smart contracts, the mechanism exhibits strong code feasibility. Unlike prior approaches, this work is the first to systematically integrate sequential auctions into DAO governance—enhancing fairness, collusion resistance, and cross-jurisdictional regulatory adaptability. It establishes both a theoretical foundation and a practical paradigm for lightweight, universally applicable DAO regulatory frameworks. (136 words)
📝 Abstract
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 not only facilitates the ability of DAOs to meet their normative and operational goals in the face of diverse regulatory approaches, but also strengthens the case for creating a less burdensome but at least equally effective regulatory regime for DAOs that employ the mechanism. Designed to shift control to the party with the most promising business plan, at the same time it deters value destruction by control parties, maximizes social surplus, and distributes that surplus in a way that tends to promote investment by other parties both at start up and on an on-going basis.