Token Engineering for decentralized autonomous organization

Level: MA/MAP
Responsible person: Dr Mark C. Ballandies
Keywords:  DAO, Blockchain, Tokenomics, Token Engineering

The concept of tokenization within decentralized autonomous organizations (DAOs) has gained significant traction in recent years, with tokens being used for various purposes such as governance, access to services, reputation, and economic incentives [1–3]. However, designing a functional and meaningful token requires careful consideration of multiple factors, including incentive mechanisms for its members, economic sustainability, alignment with the organization’s mission and the behavioural impact [4–6]. This trend has an emerging discipline called token engineering. Simulation tools have been developed, including Token Spice [8] and the Token Commons Simulator. Additionally, organizations such as Token Engineers have emerged, and an increasing array of educational materials has been developed over the years [7].

DAO Suisse [12] is an umbrella organization that aims to foster the development of DAOs in Switzerland, put Switzerland at the forefront of exploring innovative ways to enhance the DAO ecosystem and foster sustainable engagement among its members [12]. As DAOs continue to evolve as a transformative model for decentralized governance and collaboration, and the successful launch of the organization after 2 years, DAO Suisse seeks to introduce a token, which can serve as a critical tool to incentivize participation, and reflect the overall health and value of the DAO ecosystem, and optimally align stakeholders interests. This research will focus on designing and implementing a token that is both innovative and practical, ensuring it aligns with DAO Suisse’s goals while avoiding unnecessary complexity. Note, that there is an ongoing debate on how to integrate governance with other objectives within a single token. Due to sustainability considerations, this remains challenging. For non-profit organizations, the difficulty is even greater, as investor incentives—primarily focused on increasing the value of their holdings—are not aligned with the non-profit-oriented goals of the DAO. Thus, this research does not contribute to the single token debate but rather focuses on the network aspects (access to services, reputation, economic incentives, etc).

To understand the research problem, this research will begin with a mapping of DAO Suisse,  its stakeholders, their incentives and goals following a value-sensitive Design Science Research methodology [11] . Then followed by a literature review on token engineering and an analysis of existing token models. DAO token toolings, such as Vocdoni [9], and Aragon [10] will be explored. Insights will be gathered from DAO Suisse stakeholders to ensure the token design aligns with the organization’s goals. In addition to the token design, the implementation of the token is a critical aspect of this research. This involves developing a technical plan for deploying the token and testing its functionality in a controlled environment. The token will be tested in a simulated environment to evaluate its performance and refine its design as needed.

The significance of this research extends beyond DAOSuisse, as it contributes to the broader understanding of token engineering and its application within DAOs. By exploring innovative approaches to token design and implementation, this project has the potential to set a benchmark for other DAOs seeking to leverage tokenization as a tool for engagement and sustainability development for decentralized organisations at large.

The students will obtain access to DAO Suisse’s ecosystem and stakeholders to gather insights and feedback. Additionally, legal and regulatory guidance will be given to ensure compliance with Swiss laws governing blockchain and tokenization. Additionally, the DAO Suisse community members with DAO expertise can provide consultancy at every step of the research.

Additional Contact Person

DAOSuisse
Una Wang
wang@ibi.baug.ethz.ch

References:

[1]           Buterin V. DAOs, DACs, DAs and More: An Incomplete Terminology Guide 2014.
[2]           Braun A, Häusle N, Karpischek S. Incentivization in Decentralized Autonomous Organizations. SSRN Journal 2021.
[3]           Nabben K. Is a “Decentralized Autonomous Organization” a Panopticon?: Algorithmic governance as creating and mitigating vulnerabilities in DAOs. Proceedings of the Interdisciplinary Workshop on (de) Centralization in the Internet, Virtual Event Germany: ACM; 2021, p. 18–25.
[4]           Ballandies MC. To incentivize or not: Impact of blockchain-based cryptoeconomic tokens on human information sharing behavior. IEEE Access 2022;10:74111–30.
[5]           Voshmgir S, Zargham M. Foundations of Cryptoeconomic Systems
[6]           Lesavre L, Varin P, Yaga D. Blockchain Networks: Token Design and Management Overview. National Institute of Standards and Technology; 2021.
[7]           On the Practice of Token Engineering, Part I: Enter the Token Engineer. BlockScience Blog 2019.
[8]           McConaghy T. Introducing TokenSPICE. TokenSPICE 2021.
[9]Vocdoni - Digital voting
[10]        Aragon. Aragon 2017.
[1] Ballandies, M.C., Holzwarth, V., Sunderland, B., Pournaras, E. and Brocke, J.V., 2024. Advancing Customer Feedback Systems with Blockchain: When Design Science Research Meets Value-Sensitive Design. Business & Information Systems Engineering, pp.1-23.  
[12]        DAO SUISSE. https://www.daosuisse.com/