Community driven audits work in DAOs and rarely in centralized systems because the users of the system typically know best how to assess other members, whereas centralized incentive design does not enable incorruptible internal controls.
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The decentralized nature of DAOs enhances efficiency of coordination because the users of the system, e.g. DAO members, typically know best how to assess other users / DAO members.
Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904
Holds when
DAO governance equipped with an effective incentive design
Classification
mechanismsupport: arguedcompliancedao
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