When the governance of algorithms fails: The DAO case Cuando la gobernanza de los algoritmos falla: el caso The DAO

Abstract

This article explores the challenges of algorithmic governance using the case study of “The DAO”, an ephemeral attempt to create a decentralized autonomous organization on the Ethereum blockchain platform. Despite its brief lifespan and significant loss of investment due to a security exploit, The DAO offers critical insights into emerging forms of algorithmic authority, the practical governance of autonomous and decentralized systems, and the potential failures in designing incentives and modeling actions. The article also delves into the agency problem in economics and corporate governance, illuminating how these concepts intertwine with algorithmic governance.