Incentives in decentralised autonomous organisations

This study examines the impact of competitive incentives on member effort and organisational success, providing insights for practitioners aiming to optimise the performance of DAOs (Decentralised Autonomous Organisations). By leveraging the power of economic incentives through token rewards, DAOs, a novel form of member-owned organisational structure built on blockchain technology, are able to foster engagement and contributions from their members. Since tokens represent a DAO’s value, in contrast to equity investors, token financing motivates members to apply effort, enabling a DAO to incentivise higher efforts than other member-owned organisations such as cooperatives. This study aims to investigate whether the association between efforts and tokens can effectively motivate members to generate value for DAOs. Our findings seek to assist practitioners in decision-making when selecting the optimal organisational structure based on the number of members and the share of tokens allocated to community rewards.