DAOs of Collective Intelligence? Unraveling the Complexity of Blockchain Governance in Decentralized Autonomous Organizations

Abstract: Decentralized autonomous organizations (DAOs) have transformed organizational structures by shifting from traditional hierarchical control to decentralized approaches, leveraging blockchain and cryptoeconomics. Despite managing significant funds and building global networks, DAOs face challenges like declining participation, increasing centralization, and inabilities to adapt to changing environments, which stifle innovation. This paper explores DAOs as complex systems and applies complexity science to explain their inefficiencies. In particular, we discuss DAO challenges, their complex nature, and introduce the self-organization mechanisms of collective intelligence, digital democracy, and adaptation. By applying these mechanisms to refine DAO design and construction, a conceptual framework for assessing a DAO's viability is created. This contribution lays the foundation for future research at the intersection of complexity science, digital democracy and DAOs.