Blockchain technology promises to serve as a means for investors (or cryptoasset holders) to organise without boards or intermediaries. These blockchain organisations purport to function through their members’ direct governance in the form of so-called DAOs (or decentralised autonomous organisations). As virtual spaces on a digital platform, DAOs allow users to aggregate and generate value through computer code as a source of governance, relying entirely on their members to make decisions in a truly decentralised fashion. Yet, blockchain fails to live up to the promise of decentralisation of powers among its members, creating legal issues that have not been adequately addressed.
Most significantly, small cryptoasset holders (retail investors) often do not actively exercise their governance rights within DAOs. Instead, they perceive their cryptoassets primarily as a means of generating yield rather than an instrument for decentralised governance or control. This limited understanding potentially leads to instances of vote buying while facilitating illegal activities, such as financing terrorism, through the manipulation of votes on proposals to transfer funds to anonymous accounts. Such prohibited activities stem from the separation of voting rights from equity interests.
The prospective study of investors’ behaviour through an experiment will inform the analysis of how the dissociation of their rights incentivises active participation in governance.
On 7 March 2024, the project has been presented at the University of Westminster, more information can be retrieved at the event link .