Companies Face Risk and Opportunity with Distributed Governance Structures

In 2016, enterprising software developers sought to create a business entity with a unique governance structure: a leaderless, decentralized venture capital firm that would allow investors to vote on and collectively fund proposals. The Distributed Autonomous Organization (DAO) attracted more capital than its backers had anticipated, becoming the largest crowdfunded project ever with $168 million raised. To participate, investors poured funds into ether, a digital currency designed to facilitate decentralized applications on Ethereum, which is an open source, blockchain-based computing platform. After acquiring ether, investors exchanged it for the DAO’s tokens, entitling them to participate in its governance, profits, and … Read more