Enhanced Engagement Yet Undermined Decentralization: The Impact of Delegation on User Voting Behavior in DAO

DAO, a digital innovation of organization governance, has issues of users’ low participation and insufficient use of voting powers (VPs). Aiming to address these issues, delegation was introduced in DAOs, allowing users to delegate their VPs to others to vote on their behalf. To investigate the impacts of delegation on the users’ voting behavior, we conduct the staggered DID analysis with lookahead matching and leverage the introduction of delegation in Decentraland. Drawing upon the disciplining effect of delegation, we find that delegatees become more engaged in voting but tend to follow the majority. Also, they are more sensitive to the funding-related proposals. Moreover, the number of their delegated VPs and their participation duration hold different moderating effects. Finally, being delegated motivates delegatees to contribute more to the platform. We innovatively explain the delegation mechanism in DAO governance and point out its potential risk of undermining the original intention of decentralization.