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Full-Text Articles in Banking and Finance Law
Scaling Daos Through Fiduciary Duties, Alex Dolphin
Scaling Daos Through Fiduciary Duties, Alex Dolphin
BYU Law Review
DAOs (Decentralized Autonomous Organizations) are a unique type of business organization due in large part to their directly democratic governance structure. Owners of DAOs, “tokenholders,” do not delegate control to a board or a general partner. Rather, tokenholders directly control a DAO and must approve every action that a DAO takes. Because tokenholders do not delegate control to an agent, the principal-agent problem is tempered in DAOs. The principal-agent problem is the basis for the fiduciary duties that govern traditional business organizations. These fiduciary duties are meant to prevent agents entrusted with power by their principals from self-dealing. Some have …