Assessing the Effectiveness of Compliance Programs Through the Use of the Metaverse and Blockchain

The emergence of Decentralized Autonomous Organizations (DAOs) presents a fundamental challenge to the traditional corporate form, which has dominated economic organization for over a century. Built on blockchain technology, DAOs propose a new model for coordinating economic activity. This study addressed the critical question of institutional efficiency by applying the lens of Transaction Cost Economics (TCE) to compare DAOs and traditional corporations. A comparative institutional analysis was conducted using a mixed-methods approach. We employed a multiple case study design, analyzing two representative DAOs and two analogous traditional corporations from Q1 2023 to Q4 2024. Data collection involved the systematic analysis of archival records, including 215 DAO governance proposals and corporate filings, and 32 semi-structured interviews with key participants. A novel analytical framework was developed to categorize transaction costs into ex ante (search, bargaining) and ex post (monitoring, enforcement), further distinguishing between 'on-chain' and 'off-chain' costs. The study revealed significant trade-offs between the two organizational forms. Traditional corporations exhibited high ex ante bargaining costs (legal, negotiation) and ex post monitoring costs (managerial overhead), but benefited from established legal frameworks that reduced enforcement uncertainty. Conversely, DAOs significantly lowered specific transaction costs through automation via smart contracts, particularly in on-chain bargaining and enforcement for codified tasks. However, DAOs incurred substantial, often hidden, new transaction costs related to off-chain social coordination, governance participation, and navigating legal ambiguity. This was termed the 'Governance Overhead Paradox'. In conclusion, DAOs do not represent a universally superior organizational form but rather a new point on an institutional possibility frontier. They are highly efficient for tasks that are global, permissionless, and computationally verifiable. Traditional firms retain advantages in contexts requiring complex, subjective decision-making and legal certainty. The future of the firm is likely not a replacement of one form by the other, but a pluralistic ecosystem where hybrid models emerge.

The emergence of Decentralized Autonomous Organizations (DAOs) presents a fundamental challenge to the traditional corporate form, which has dominated economic organization for over a century. Built on blockchain technology, DAOs propose a new model for coordinating economic activity. This study addressed the critical question of institutional efficiency by applying the lens of Transaction Cost Economics (TCE) to compare DAOs and traditional corporations. A comparative institutional analysis was conducted using a mixed-methods approach. We employed a multiple case study design, analyzing two representative DAOs and two analogous traditional corporations from Q1 2023 to Q4 2024. Data collection involved the systematic analysis of archival records, including 215 DAO governance proposals and corporate filings, and 32 semi-structured interviews with key participants. A novel analytical framework was developed to categorize transaction costs into ex ante (search, bargaining) and ex post (monitoring, enforcement), further distinguishing between 'on-chain' and 'off-chain' costs. The study revealed significant trade-offs between the two organizational forms. Traditional corporations exhibited high ex ante bargaining costs (legal, negotiation) and ex post monitoring costs (managerial overhead), but benefited from established legal frameworks that reduced enforcement uncertainty. Conversely, DAOs significantly lowered specific transaction costs through automation via smart contracts, particularly in on-chain bargaining and enforcement for codified tasks. However, DAOs incurred substantial, often hidden, new transaction costs related to off-chain social coordination, governance participation, and navigating legal ambiguity. This was termed the 'Governance Overhead Paradox'. In conclusion, DAOs do not represent a universally superior organizational form but rather a new point on an institutional possibility frontier. They are highly efficient for tasks that are global, permissionless, and computationally verifiable. Traditional firms retain advantages in contexts requiring complex, subjective decision-making and legal certainty. The future of the firm is likely not a replacement of one form by the other, but a pluralistic ecosystem where hybrid models emerge.

Decentralized autonomous organizations (DAOs) are a new type of organization that are run using blockchain technology and are designed to operate without the need for traditional management structures. In this research project, the authors explored the feasibility of using DAOs as a new model for economic governance in the blockchain era. The authors examined the key features and functions of DAOs, assessed the potential benefits and challenges of using these organizations as a model for economic governance, and considered the legal and regulatory implications of DAOs. The authors also examined case studies of existing DAOs and analyzed their successes and failures in order to identify best practices for implementing and operating DAOs effectively. The findings suggest that DAOs have the potential to disrupt traditional models of economic governance by providing a new way for organizations to operate and make decisions in a transparent and decentralized manner. However, there are also challenges and limitations to using DAOs as a model for economic governance.

Decentralized Autonomous Organizations (DAOs), based on blockchain technology, are organizations that operate autonomously according to agreements made among members rather than through a centralized authority. Utilizing blockchain’s attributes of decentralization and cryptography, DAOs embody decentralization, autonomy, and transparency, establishing themselves as a distinctive governance model. However, despite the increasing prevalence of DAOs globally, their legal nature remains ambiguous, leading to unclear legal relationships and insufficient protection for participants and third parties. In 2021, Wyoming proactively established the Wyoming Decentralized Autonomous Organization Supplement, creating a foundational legal framework for the formation, operation, and dissolution of DAOs. Wyoming recognizes DAOs as a special form of LLC. However, considering the various types of DAOs in operation, legislation that reflects each organization's characteristics, rather than prescribing a single legal status, is needed. Furthermore, this study reviews elements within Wyoming’s regulations that may conflict with DAOs’ core values of decentralization and anonymity, highlighting areas requiring caution in the legislative process. Finally, to address the technical risks and potential centralization tendencies within DAOs, this paper suggests imposing a high duty of care on key developers, introducing clauses to exclude indemnification for core members, and formalizing dispute resolution procedures in advance.

PurposeToday, business model innovations leverage digital technologies to gain a competitive advantage and transform business processes. Blockchain is still gaining attention in specific fields and bringing value to business models. There is a dearth of research on how blockchain decentralized autonomous organizations impact organization business model innovations. This study attempts to contribute the body of knowledge based on a review of decentralized autonomous organizations and the business model innovation literature using the integrative and generative approach.Design/methodology/approachThe paper offers an analysis of decentralized autonomous organizations based on digital business models built on the well-established work by Osterwalder and Pigneur (2010). The practical multilayered decentralized autonomous organizations architectural implementation model design is achieved using practical archetypes depicted in the proposed decentralized autonomous organizations business model. The paper evaluates a marketplace comprising 13 decentralized autonomous organizations led platforms with core functionalities.FindingsThe paper delivers decentralized autonomous organizations led digital business model canvas elements to explain decentralized autonomous organization business model innovations. It presents the underlying multilayered decentralized autonomous organizations architectural implementation model required to conceptualize a practical business model with an enterprise-ready target operating model.Research limitations/implicationsThe paper contributes directly to the practical decentralized autonomous organizations business model canvas, exemplifying the nine elements of decentralized autonomous organizations’ characteristics for any organizational transformation. The tools and accelerators (business model, layered architecture, target operating model and product mapping) developed in the paper address the managerial challenges of redesigning the decentralized business models.Originality/valueThe proposed decentralized autonomous organizations smart contract powered business model provide a digital platform to adhere to rules, follow policies, preserve principles and develop consensus without human interventions. The paper shapes the first of its kind decentralized autonomous organizations marketplace evaluation while mapping it to decentralized autonomous organizations layered architecture product requirement considering business model dimension to adopt actionable target operating model.

The development of Bitcoin and its underlying technology blockchain has enabled a new phenomenon called decentralized autonomous organizations (DAOs). DAOs can be perceived as self-governing organizations whose management is based on programmed and encoded rules on a decentralized and distributed peer-to-peer network. These DAOs typically manage and allocate funds, often in the form of cryptocurrencies. However, in recent years, a variety of DAOs have been established to provide services (e.g., currency exchange, project financing), curate collections (e.g., art collections), or own and manage real assets (e.g., land). Currently, DAO literature focuses mainly on online communities managing digital assets; however, DAOs owning physical properties differ from them in localized communities, asset indivisibility, and additional complexity in collective acquisition, ownership, limited physical capacity, and decentralized governance. Such property-owning DAOs are interesting, because they fuel the transition from purely online organizations into organizations integrating with the physical world. From an organizational system theory perspective this article explores how a DAO owning properties could be designed by exploring three DAO projects that own properties. Applying a conceptual research design, we first identify DAO Design Principles obtained by traditional organizational system theory, followed by examining and describing the core organizational principles for property-owning DAOs. Based on a comprehensive discussion of the conceptual findings, we present a research agenda for further studies on DAOs owning properties.

The global adoption and diffusion of cryptocurrencies and blockchain technologies has given rise to a new form of organizing referred to as decentralized autonomous organizations (DAO). Many DAOs sit at the intersection between decentralized blockchain technologies and finance, so-called decentralized finance (DeFi). This teaching case focuses on one of the most prominent and established DeFi DAOs, MakerDAO, a community-driven initiative that leverages blockchain technology to create a stablecoin pegged to the US Dollar as a basis for decentralized financial services such as lending and yield generation. The case describes the delicate balancing act between centralization and decentralization in the evolution of MakerDAO. It can be used in graduate business programs to achieve the following learning objectives: (1) Understand the concept of decentralized autonomous organization (DAO) as a new form of organizing in which communities leverage blockchain technologies and community-based principles to work jointly on a common goal, (2) Be able to assess the benefits and risks of novel decentralized finance (DeFi) models, such as MakerDAO, which offer alternative financial tools and resources that are not controlled by traditional financial institutions, (3) Evaluate the potential and pathway for disruptive innovation in the era of blockchain, cryptocurrencies, and Web3, where decentralized applications (dapps) on blockchain networks enable decentralized and trustless transactions and interactions.

In this paper, we analyze the current management status of decentralized autonomous organizations (DAO) and propose a protocol for managing a DAO. For the management of this form of organization, decentralization and autonomy are particularly critical. This basic premise avoids the potential abuse of power by centralized authority because such a firm is governed by code. In centralized firms, company members have a stronger right to participate in decisions made by high-ranking administrators. Blockchain technology, which provides a decentralized form of indestructible data storage, has gained much attention in recent years. Smart contracts, executable code stored in a blockchain, are based on this concept. We propose an approach to building DAO using smart contracts based on blockchain technology, which provides the optimum conditions for the decentralization and autonomy of DAO. The results show that our proposal outperforms existing solutions in terms of team autonomy within the DAO, the ability of all company members to vote on proposals, and the members elected by the rest of the company for higher positions within the organization. The key benefit of our solution is the universal concept of DAO as a service for any firm with a team-based management approach. This platform may be used by many businesses and also provides extensive access rights control based on predefined rules.

DAO Regulation and Legislation This article explores the contrast between traditional centralized corporate entities and Decentralized Autonomous Organizations (DAOs) in the U.S. financial regulatory landscape. While traditional entities operate with a centralized structure and clear managerial hierarchies, DAOs disrupt this paradigm with their decentralized, democratic, and digital nature, thanks to blockchain technology. DAOs face significant legal challenges due to their unique structures, including regulatory uncertainty and liability issues. The paper highlights the need for regulatory clarity and adaptation to accommodate the participatory structures of DAOs. It concludes that while existing financial regulations apply to DAOs, they often fall short due to DAOs' unique nature, necessitating an update in regulatory approaches to appreciate the specific virtues of DAOs and Legal Autonomous Organizations (LAOs). The evolving landscape of DAOs demands close observation and involvement from various stakeholders in the blockchain industry to address these regulatory challenges effectively.

Blockchain technology has enabled a new kind of distributed systems. Beyond its early applications in Finance, it has also allowed the emergence of novel new ways of governance and coordination. The most relevant of these are the so-called Decentralized Autonomous Organizations (DAOs). DAOs typically implement decision-making systems to make it possible for their online community to reach agreements. As a result of these agreements, the DAO operates automatically by executing the appropriate portion of code on the blockchain network (e.g., hire people, delivers payments, invests in financial products, etc). In the last few years, several platforms such as Aragon, DAOstack and DAOhaus, have emerged to facilitate the creation of DAOs. As a result, hundreds of these new organizations have appeared, with their communities interacting mediated by blockchain. However, the literature has yet to appropriately explore empirically this phenomena. In this paper, we aim to shed light on the current state of the DAO ecosystem. We review the three main platforms nowadays (Aragon, DAOstack, DAOhaus) which facilitate the creation and management of DAOs. Thus, we introduce their main differences, and compare them using quantitative metrics. For such comparison, we retrieve data from both the main Ethereum network (mainnet) and a parallel Ethereum network (xDai). We analyze data from 72,320 users and 2,353 DAO communities in order to study the three ecosystems across four dimensions: growth, activity, voting system and funds. Our results show that there are notable differences among the DAO platforms in terms of growth and activity, and also in terms of voting results. Still, we consider that our work is only a first step and that further research is needed to better understand these communities, and evaluate their level of accomplishment in reaching decentralized governance.

Decentralized Autonomous Organizations (DAOs) represent a transformative innovation in financial governance, enabling community-owned and transparently operated structures through blockchain technology. This paper presents a conceptual model for integrating DAOs into the banking and financial services sector to promote equitable, trustless, and decentralized financial systems. Traditional banking frameworks often rely on centralized authorities, opaque governance, and profit-driven agendas that marginalize underserved populations. By contrast, DAOs offer a paradigm where smart contracts execute predefined rules without intermediaries, allowing stakeholders to participate directly in decision-making processes. The proposed model outlines a framework for community-owned banking, emphasizing the use of token-based governance, peer-to-peer lending mechanisms, automated interest rate adjustments, and decentralized reserve management. This system fosters financial inclusion by allowing unbanked and underbanked populations to access financial services through open and transparent digital platforms. Moreover, DAO-based financial governance ensures real-time auditability, accountability, and resistance to single points of failure—addressing critical vulnerabilities in conventional financial institutions. Through the conceptualization of a DAO-led Community Bank (DAO-CB), the paper demonstrates how decentralized finance (DeFi) primitives such as liquidity pools, stablecoins, and collateralized lending can be integrated with democratic governance models to create robust, community-led economic ecosystems. Legal, technical, and regulatory considerations are examined, with a focus on scalability, compliance, and user adoption challenges. The study argues that while DAO banking may not yet replace centralized financial institutions, it serves as a powerful complementary system, especially in regions with limited banking infrastructure or high levels of financial distrust. The research contributes to the growing discourse on decentralized finance and its real-world applications, offering insights into how DAOs can redefine ownership, control, and transparency in the financial sector. The conceptual model provides a foundation for future empirical studies and prototype development, encouraging stakeholders, developers, and policymakers to collaborate on building decentralized, equitable, and resilient financial ecosystems.

The Swiss Association as a Legal Wrapper for a Global DAO and vis-à-vis the MiCA Regime The article explores the utilization of decentralized autonomous organizations (DAOs) and the legal framework of Swiss associations as a possible legal wrapper – particularly for globally operating DAOs. All against the backdrop of a steadily growing regulation to the likes of the EU’s MiCA framework.The discussion encompasses the essential characteristics of DAOs, emphasizing their decentralized nature, shared purpose, autonomy, and predefined rules.The article highlights the legal complexities around DAOs. Considering many DAOs operating without a deliberately chosen legal structure, the argument is made that even though DAOs might be set up with the idea to not be regulated at law, the contrary might be the case. Legal concepts to the effect of ‘joint ventures’ or ‘simple partnership’ may lead to the inadvertent formation of legal entities. Thus, legal risks may very likely loom over participants of DAOs whether they may desire that outcome or not.The article emphasizes liability as a driving force behind the need of a quest for legal wrappers. To mitigate unintended liabilities, selected solutions are being proposed. The text discusses further benefits of a legal wrapper. The argument is made that DAOs should deliberately chose a legal wrapper mirroring their nature and fitting their needs.The discussion then turns to the Swiss association as an attractive choice for globally operating DAOs. The autonomy granted to Swiss associations under Swiss Law providing for freedom, self-governance, and flexibility mirror the nature of a DAO. The features of the Swiss association and its benefits as a legal wrapper for DAOs are then being scrutinized. The text posits the establishment of a Swiss association as a solution to limit liability for DAOs participants. Ultimately, the Swiss association is presented as a wrapper offering not only liability protection but also additional benefits for DAOs, which are further explored.

The ins and outs of decentralized autonomous organizations (DAOs) unraveling the definitions, characteristics, and emerging developments of DAOs

Decentralized Autonomous Organizations (DAOs) represent a new form of economic organization, leveraging smart contracts and blockchain technology to manage financial operations, governance, and decision-making. This structure eliminates the need for centralized intermediaries. From an accounting and economic perspective, this article investigates DAOs, offering a comprehensive examination of their architecture, voting methods, governance procedures, smart contract vulnerabilities, and the legal environment. The article proposes a five-tiered DAO structure, demonstrating how each layer contributes to operational efficiency, transparency, and decentralized responsibility. The study emphasizes the importance of smart contract auditing tools in ensuring reliable financial transactions. According to the data presented in the study, applying traditional accounting principles to token-based transactions, decentralized decision systems, and DAO treasuries poses significant challenges such as token valuation, revenue recognition, and the absence of standardized reporting formats. The study explains how DAOs act as economic coordinators, using real-world case studies such as MakerDAO, Gitcoin DAO, and Uniswap DAO. Additionally, the research highlights the issues DAOs face regarding valuation and compliance. This article concludes with a policy-focused examination of regulatory gaps and offers suggestions for future research directions in the areas of financial integration, legal categorization, and the sustainability of DAOs. Through the integration of institutional and economic theory with the technical structure of DAOs, this research advances our understanding of DAOs as novel forms of finance and governance.

PurposeThis study aims to explore the innovative governance structures enabled by blockchain-based decentralized autonomous organizations (DAOs) in the context of international business (IB). As nonhierarchical entities managed through collective voting and peer-to-peer interactions, DAOs challenge traditional assumptions of multinational corporation (MNC) governance.Design/methodology/approachThe authors perform a literature review, which combines qualitative content analysis of both academic papers on DAO and whitepapers with quantitative analysis of bibliometrics using VosViewer.FindingsThe findings highlight DAOs’ ability to generate new research questions and offer a foundation for future studies on decentralized governance in IB. Through a bibliometric analysis of 73 papers from Web of Science and qualitative content analysis, the authors identify four primary research streams in the DAO literature. A deep dive into financial DAOs, or DeFi DAOs, reveals insights into their governance mechanisms and implications for the studies in the field of IB.Research limitations/implicationsResearch on DAOs is in its early stages, and the practice in IB is nascent. As the regulatory, economic and technological landscape for DAOs changes, more research will be needed on the governance mechanisms and their sustainability.Originality/valueThis paper advances the field by providing a multilevel analysis of DAOs’ potential impact on IB, considering macro (country), meso (MNC/DPE) and micro (multicultural team and individual) levels.