kaal:claim:4067783-009

Most DAOs that suffer unethical behavior and rug pulls are abused by insiders, and this is possible because insiders are not properly governed and hold too much control over the DAO; true decentralized community governance removes insider and council control over keys and code.

Most DAOs that fall victim to unethical behavior and rug pulls are subject to abuses from insiders. Typically these insider abuses are possible because the insiders are not governed properly and have too much control over the DAO.

Wulf A. Kaal, DAO Fallacies (2022), II.2.a) Insider Abuses, p. 6
https://ssrn.com/abstract=4067783 · source PDF

Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783

• DAOs where councils or privileged insiders retain key and code control

mechanismsupport: arguedfailure: Privileged insider control of keys and codefamily: fraud-and-misconductdecentralizationgovernance-design

• restates kaal:claim:4015908-025 Community DAO governance makes any form of rug pull much less likely, because rug pulls typically benefit only...
• extends kaal:claim:4015908-041 Rug pull practices can take the form of a whale guaranteeing an inside developer or business head a percentage...

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