The integration of blockchain technology into civic life through Decentralized Autonomous Organizations (DAOs) is gaining traction as a potential alternative governance model, with implications for local governments and municipal management. This shift marks a departure from blockchain’s initial association with cryptocurrency exchange, evolving into a tool for community organization and decision-making.
While blockchain initially gained prominence through cryptocurrencies, its applications have expanded into areas like decentralized finance (DeFi), gaming, and supply chain logistics. DeFi platforms enable lending, trading, and savings products without traditional banking intermediaries. The gaming and online gambling industries utilize blockchain to enhance security and identify player habits. In logistics, blockchain tracks products from origin to consumer, ensuring authenticity, and traceability. Now, DAOs are emerging as a novel approach to public administration.
DAOs, or Decentralized Autonomous Organizations, are digital structures built on blockchain technology, operating through smart contracts and token-based voting systems. Unlike traditional hierarchies, decisions within a DAO are made collectively based on rules encoded in the blockchain. Proposals are voted upon, and if consensus is reached, the changes are automatically executed, ensuring transparency and democratic decision-making. The core idea is to apply the principles of Web3 to public management, potentially appealing to municipalities seeking innovation in their democratic processes and resource allocation.
Although still largely theoretical, several experiments and initiatives demonstrate the potential of DAOs in the public sector. CityDAO, launched in 2023, aimed to create a decentralized administrative system linked to land management and urban planning. Prior to this, in 2016, the Catalan network Decidim, while not a true DAO, was adopted by the Barcelona City Council for digital participatory democracy processes, demonstrating the feasibility of collaborative and transparent governance systems.
In August 2021, MiamiCoin, the first CityCoin, was launched, allowing residents to “mine” tokens, with a portion of the revenue generated directed to the city’s treasury. While not a DAO in the strictest sense, this model paved the way for future local governance structures based on tokens and citizen participation linked to municipal budgets. A 2022 proposal in Melbourne, Australia, suggested piloting a DAO as a non-hierarchical governance space to optimize resource allocation, manage community data, and foster consensus-driven urban projects.
Pilot projects too extend to community-focused initiatives with municipal relevance. In Switzerland, a DAO funded the installation of solar panels on public schools. Similarly, in South Korea, a DAO financed local art festivals through transparent budgeting and collective decision-making.
The adoption of DAOs in municipal contexts offers potential advantages, including complete transparency, which can reduce corruption and build public trust, and direct participation, empowering community members to propose ideas and vote without intermediaries. Administrative efficiency is another potential benefit, as smart contracts automate routine processes, reducing bureaucracy and accelerating decision-making. DAOs could also facilitate alternative and innovative funding models, aligning budget management with the actual needs of the population.
However, challenges remain. Low citizen participation in these projects raises concerns about their legitimacy. Unequal token distribution could replicate existing social inequalities within the digital environment. The lack of specific legal frameworks for DAOs in the governmental sphere creates uncertainty. A significant barrier is the limited technological understanding among citizens, hindering their ability to participate effectively in these systems.
