[Paper Review] The Governance of Decentralized Autonomous Organizations: A Study of Contributors' Influence, Networks, and Shifts in Voting Power

Stefan Kitzler, Stefano Balietti+3 more|arXiv (Cornell University)|Sep 25, 2023

FinTech, Crowdfunding, Digital FinanceBusiness, Management and Accounting3 citations

TL;DR

This study investigates the influence of contributors—developers and core team members—in Decentralized Autonomous Organizations (DAOs) using on-chain voting data from 872 DAOs. It reveals that contributors control governance in 7.54% of DAOs on average, decisively pass proposals in 20.41% of cases, and occupy central positions in co-voting networks, with 14.81% of proposals showing last-minute shifts in token ownership, indicating strategic coordination ahead of votes.

ABSTRACT

We present a study analyzing the voting behavior of contributors, or vested users, in Decentralized Autonomous Organizations (DAOs). We evaluate their involvement in decision-making processes, discovering that in at least 7.54% of all DAOs, contributors, on average, held the necessary majority to control governance decisions. Furthermore, contributors have singularly decided at least one proposal in 20.41% of DAOs. Notably, contributors tend to be centrally positioned within the DAO governance ecosystem, suggesting the presence of inner power circles. Additionally, we observed a tendency for shifts in governance token ownership shortly before governance polls take place in 1202 (14.81%) of 8116 evaluated proposals. Our findings highlight the central role of contributors across a spectrum of DAOs, including Decentralized Finance protocols. Our research also offers important empirical insights pertinent to ongoing regulatory activities aimed at increasing transparency to DAO governance frameworks.

Motivation & Objective

• To empirically assess the role of contributors (developers, team members) in DAO governance decision-making.
• To examine the structural centrality of contributors within DAO co-voting networks.
• To detect and quantify last-minute shifts in governance token ownership preceding votes.
• To provide data-driven insights into centralization risks within ostensibly decentralized governance models.
• To support regulatory efforts by identifying influential actors in DeFi and DAO operations.

Proposed method

• Constructed a dataset of 986,557 voters across 872 DAOs and cross-verified 438,668 votes against on-chain records with 97.48% consistency.
• Defined contributors as those with verified roles in dApp development or governance, extracted from multiple public sources.
• Built a bipartite network linking DAOs to contributor addresses and projected it into a DAO-DAO co-voting network based on shared contributors.
• Applied network centrality measures (degree, betweenness, eigenvector, closeness) and k-core decomposition to assess structural influence.
• Used an edge-weight threshold of 10 co-votes to filter co-voting relationships, ensuring robustness and reducing noise.
• Conducted sensitivity analysis on threshold values to validate stability of network statistics.

Figure 2: Contributor involvement across DAO spaces . The DAOs are ranked by contributor involvement $\bar{w}^{s}_{C}$ ( ) from highest (left) to lowest (right). Some high-TVL dApps ( ) are annotated for illustrative purposes and contributor involvement of more than $50$ % is colored ( ).

Experimental results

Research questions

• RQ1 To what extent do contributors hold decisive voting power in DAO governance across different protocols?
• RQ2 How centralized are the co-voting networks in DAOs, and are contributors positioned at the core of these networks?
• RQ3 Are there detectable patterns of last-minute token accumulation before governance votes, suggesting strategic coordination?
• RQ4 How do shifts in token ownership correlate with proposal outcomes in DeFi and other DAOs?
• RQ5 What is the empirical evidence for centralized influence among contributors in decentralized governance frameworks?

Key findings

• In 7.54% of DAOs, contributors collectively held the necessary supermajority to control governance decisions on average.
• In 20.41% of DAOs, contributors' votes were decisive in at least one proposal, indicating direct influence over outcomes.
• Contributors were consistently more central in co-voting networks than non-contributors, with higher centrality scores across all measures.
• A total of 1,202 out of 8,116 proposals (14.81%) exhibited shifts in majority ownership within days before voting, suggesting strategic token accumulation.
• The k-core analysis revealed that contributors were less frequent in low-core regions, indicating stronger integration in dense voting communities.
• An outlier cluster of non-contributors with high k-core values was detected in two networks, suggesting potential indirect influence by non-core actors.

Figure 3: Contributor self-decisions across DAO spaces. The $178$ DAOs are ranked by contributor self-decisions $\delta^{s}$ ( ) in descending order, with a threshold of $0.1$ %. The y-axis represents the fraction of proposals in which DAO contributors voted and decided their outcome with dominant v