#96 Untangling: How DAOs Work with Daniel Liebau

In this episode of Untangling Web3, Daniel Liebau, founder of Lightbulb Capital and co-author of a leading academic book on DAOs, explores how decentralized autonomous organizations are redefining governance, collaboration, and organizational design.

Drawing on research and real-world examples, this episode examines the opportunities and risks associated with DAOs as scalable, decentralized alternatives to traditional organizational structures.

Key highlights:

• Defining a DAO and Its Core Mechanics: A decentralized autonomous organization is an on-chain entity that coordinates individuals around a shared objective using blockchain-based governance systems. Participation is typically open to anyone holding the DAO's native governance token, which confers the right to vote on proposals. Unlike traditional companies, DAOs rely on distributed consensus rather than centralized leadership, and participation structures are often non-hierarchical.
• Use Cases Where DAOs Provide Strategic Value: DAOs are especially well-suited to non-profit, community-driven, or public-good initiatives. Examples include grant distribution collectives, award programs, open-source development communities, and sustainability-focused initiatives. These use cases benefit from shared governance, global participation, and token-based incentives that align diverse stakeholders without relying on central entities.
• Risks and Governance Challenges: The permissionless and decentralized nature of DAOs introduces unique challenges. Accountability risks arise when it is unclear who is responsible for decisions or outcomes. Financial risk increases when DAO treasuries are overly concentrated in their native tokens, making them vulnerable to market volatility. Governance risks include voter apathy, low participation rates, and poorly structured voting mechanisms that fail to align expertise with influence.

DAOs offer a fundamentally new model for coordination, one that replaces rigid hierarchies with collective governance, transparency, and programmable incentives. While risks around accountability, governance, and financial stability remain, DAO design continues to evolve in ways that make these organizations more resilient and scalable.

As regulatory frameworks mature and infrastructure improves, DAOs have the potential to become core components of both decentralized ecosystems and traditional institutions seeking to embrace openness and adaptability.

Learn more about Daniel's work here:

https://www.danielliebau.org/

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This episode is sponsored by the VeChain foundation. Learn more about VeBetterDAO here:

https://vebetterdao.org/

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Learn more about Web3 at:

https://untanglingweb3.com/

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Untangling Web3 is brought to you by hosts Jack Davies and Alec Burns, with music by Daniel Paigge. Got a question or topic suggestion? Send us an email at [email protected].

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