# kaal:claim:3782210-021

**Claim.** DAOs are free to organize as they choose, and those that fail to find the right incentives for productive behavior will certainly go extinct, because the feedback loop that includes customers outside the DAO punishes unproductive DAOs by loss of fees.

**Type.** predictive  **Support.** argued

**Holds when.**

- DAOs that depend on outside customer fees
- competitive markets for DAO services

**Source quote.**

> DAOs have the freedom to organize any way they choose. If they fail to find the right incentives for productive behavior, they will cer- tainly go extinct. The feedback loop that includes customers outside the DAO naturally punishes any unproductive DAOs, by loss of fees.

**From.** Craig Calcaterra, Wulf A. Kaal, *The Importance of Reputation for the Evolution of Decentralization* (2021), Consequences of the architecture, page 8

**Cite as.** Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210

**Verify.** sha256 of source PDF `9cc531ab239f6266c8aeddcc8e54f4c06029c44e825444bee137bbcc0c9d0a8e` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Calcaterra%20and%20Kaal%20-%202021%20-%20The%20Importance%20of%20Reputation%20for%20the%20Evolution%20of%20Decentralization.pdf

**Failure mode.** DAO extinction by fee loss  (family: staking-and-incentive-misalignment)

**Topics.** institutional-design, dao, risk-and-incentives

**Keywords.** evolutionary-selection, dao-extinction, customer-feedback, incentive-design

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