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Department of Informatics Blockchain and Distributed Ledger Technologies

Designing DAOs for Governance in Smart Ecosystems: A Design Science Research Approach

Level: BA/MA
Responsible person: Parminder Kaur Makode
Keywords:  DAO, Conceptual Framework, Design Science 

Decentralized Autonomous Organizations (DAOs) are transforming governance in digital and physical spaces by leveraging blockchain technology for transparent, decentralized decision-making. Projects like No1s1, a house governed autonomously by a DAO [1], demonstrate the potential for DAOs to manage physical assets. However, existing DAO implementations are largely limited to individual assets, leaving a gap in exploring how multiple DAOs could collectively govern interconnected physical assets in smart ecosystems, such as smart cities and smart villages. 

This thesis will employ the Design Science Research (DSR) framework [2] focusing on conceptual development and analysis. The methodology consists of three main stages, culminating in a communication phase. 

The first stage, problem identification and motivation, involves a comprehensive literature review to explore DAO governance in smart ecosystems. This includes analyzing projects such as the No1s1 project, which demonstrates DAO governance of a self-owned house, as well as DAO frameworks like Colony and Aragon, which provide insight into decentralized governance models. Additionally, the study will examine challenges in smart ecosystems, including centralized inefficiencies and transparency issues, to identify gaps that a DAO-based framework could address. 

In the second stage,to define objectives of the solution, the thesis will develop a conceptual framework for DAOs governing interconnected physical assets. This framework will focus on three key components: (1) Governance, detailing collective decision-making mechanisms such as voting systems and consensus protocols; (2) Data Sharing, proposing transparent and secure mechanisms for data exchange between DAOs and physical assets; and (3) Interoperability, identifying protocols to facilitate communication among DAOs managing different assets. To ensure the framework's feasibility, success metrics will be established, including Governance Efficiency (speed and fairness in decision-making), Scalability (ability to accommodate more DAOs), and Transparency (auditability of governance processes and decisions). 

The third stage, analysis and discussion, will critically evaluate the proposed framework using the defined metrics. The analysis will theorize how the framework addresses challenges like scalability, efficiency, and collaboration, and it will explore hypothetical use cases such as collaborative housing in smart villages. Finally, the discussion will highlight potential challenges, including technical complexity and regulatory barriers, offering a commprehensive understanding of the framework's applicability. 

This thesis seeks to bridge this gap by developing a conceptual framework for DAOs to collaborate in governing ecosystems of physical assets. Using Design Science Research (DSR), this study aims to address challenges such as scalability, data sharing, and decision-making in DAO networks for physical spaces. 

References:

  • Hunhevicz, J. J., Wang, H., Hess, L., & Hall, D. (2021). no1s1–a blockchain-based dao prototype for autonomous space. In Proceedings of the 2021 European Conference on Computing in Construction (Vol. 2, pp. 27-33). University College Dublin. 
  • Hevner, A. R., March, S. T., Park, J., & Ram, S. (2004). Design science in information systems research. MIS quarterly, 75-105.  
  • Ballandies, M. C., Carpentras, D., & Pournaras, E. (2024). DAOs of collective intelligence? Unraveling the complexity of blockchain governance in decentralized autonomous organizations. arXiv preprint arXiv:2409.01823 
  • Spychiger, F., Makode, P. K., Küng, L., & Tessone, C. J. (2024, July). Governance and Maintenance for a DAO with Physical Assets-An Agent-based Model. In 2024 IEEE International Conference on Omni-layer Intelligent Systems (COINS) (pp. 1-6). IEEE.