# Dao failure

`kaal:entity:dao-failure`

**Status.** derived

This node is assembled mechanically from the 6 claims that carry the concept tag `dao-failure`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself.

## Every claim under this term

6 claims across 3 works, 2020 to 2021.

**2020**

- [3652481-035](https://wulfkaal.github.io/claims/3652481-035) [failure/argued] *(failure mode)* -- When the degrees of internal and external governance decentralization cancel each other out, the DAO is less likely to succeed in its decentralization attempt and correspondingly more likely to fail.
  > If the degrees of internal and external governance decentralization cancel each other out, the respective DAO is less likely to succeed in its decentralization attempt, which in turn makes it more likely for the DAO to fail.
  Wulf A. Kaal, Decentralized Autonomous Organizations – Internal Governance and External Legal Design (2020). SSRN: https://ssrn.com/abstract=3652481

**2021**

- [3782210-006](https://wulfkaal.github.io/claims/3782210-006) [failure/asserted] *(failure mode)* -- The failure of many DAOs to date is traceable to their reliance on the good will of network members rather than on engineered incentives.
  > The failure of many DAOs, so far, has been their reliance on the good will of the members of the network.
  Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210
- [3782210-007](https://wulfkaal.github.io/claims/3782210-007) [mechanism/argued] *(failure mode)* -- As a network grows its members become more anonymous and individually less important, which makes cheating more locally enticing and less globally noticeable, so the system eventually collapses once cheating is obviously the best individual strategy.
  > As the network grows, however, the members become more anonymous. Individually they become less im- portant, so cheating is more locally enticing and less noticeable globally. Eventually (or immediately) the system will collapse when it becomes obvious cheating is the best individual strategy.
  Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210
- [3799320-001](https://wulfkaal.github.io/claims/3799320-001) [failure/argued] *(failure mode)* -- The concept of a DAO fails if it becomes centralized, and centralization in governance is the largest single threat to a DAO.
  > The concept of a DAO fails if it becomes centralized. Centralization is omnipresent in computing systems, economics, and society at large. Yet centralization in governance is perhaps the largest threat to a DAO.
  Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320
- [3799320-002](https://wulfkaal.github.io/claims/3799320-002) [failure/argued] *(failure mode)* -- Decentralized governance must be dynamic and evolutionary, otherwise the system becomes centralized and brittle over time; most DAOs fail to accomplish this.
  > Decentralized governance has to be dynamic and evolutionary in order to avoid for the system to become, over time, centralized and brittle. Most DAOs fail to accomplish this.
  Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320
- [3799320-003](https://wulfkaal.github.io/claims/3799320-003) [mechanism/argued] *(failure mode)* -- Tying a DAO's legal existence to existing legal and jurisdictional frameworks typically requires a representative in the chosen jurisdiction, which centralizes the DAO and results in the failure of the DAO concept.
  > Tying the legal existence of a DAO to any forms of existing legal and jurisdictional frameworks typically results in the need for a representative in the chosen legal framework and jurisdiction, which, in turn, centralizes the DAO and results in the failure of the DAO concept.
  Wulf A. Kaal, A Decentralized Autonomous Organization (DAO) of DAOs (2021). SSRN: https://ssrn.com/abstract=3799320

## Verify

Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. Nothing here asks to be taken on trust.

    curl -s https://wulfkaal.github.io/entities/dao-failure.md | sha256sum

**Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.