This is the author's accepted manuscript version of an article published by SAGE in Information Polity. Wollenschläger, S., & Lustenberger, M. (2026). Self-Organization and Digital Participation: Evaluating DAOs and Alternative Governance Models. Information Polity. Copyright © 2026 SAGE. https://doi.org/10.1177/15701255261421040 Self-Organization and Digital Participation: Evaluating DAOs and Alternative Governance Models Sabrina Wollenschläger1[0009-0000-8397-2734] and Michael Lustenberger1[0000-0003-1503-6826] 1 ZHAW Zurich University of Applied Sciences, School of Management and Law, Institute for Organizational Viability, Theaterstrasse 17, 8400 Winterthur, Switzerland Corresponding Author: Dr. Michael Lustenberger, +41 (0)58 934 68 42, luse@zhaw.ch Abstract This study examines how Decentralized Autonomous Organisations (DAOs) could be incorporated into municipal administration to improve citizen participation and transparency. As DAOs in governance are attracting growing academic and practical attention, this research uses scenarios to analyze the conditions for their application at municipal and regional levels. It takes a conceptual, scenario-based approach to develop a model for DAO-based e- participation, identifying key concepts and their relationships to explain how DAOs operate as self-regulated systems for digital participation. The research is structured into three phases: First, in the foundational phase, this study synthesizes existing research on DAOs and participatory governance models, contrasting blockchain-based and traditional processes to establish a framework for DAO integration. Second, the application phase uses illustrative scenarios to explore how DAO mechanisms might influence participation and decision-making in municipalities. Third, the evaluation and recommendation phase consolidates insights into a structured model for implementation, highlighting task characteristics, contextual conditions, and organizational capacities that shape DAO feasibility. The analysis suggest that DAOs may enable new forms of participation and more transparent procedures, but only when antecedent conditions such as digital literacy, administrative capacity, and infrastructure stability are sufficiently met. Future work should look at long-term effects, compare cases across municipalities, and examine the role of legal and regulatory frameworks. Key Points for Practitioners • Participation: Municipalities should establish inclusive digital participation tools, such as online voting, suggestion platforms, and collaborative forums, to enable meaningful input from citizens, non-governmental organizations (NGOs), and local businesses. These tools promote shared ownership and strengthen democratic legitimacy. When choosing between participation technologies, municipalities should consider the complexity and duration of the governance task: DAO-based participation is most suitable for recurring, multi-stakeholder processes that require high transparency, whereas simpler platforms such as Decidim or Crossiety are preferable for short-term or low-complexity initiatives. • Assessment: Municipalities should begin with a structured needs analysis of citizens and stakeholders to identify governance challenges that DAOs can address. This process should also assess key antecedent conditions for DAO implementation, including digital literacy, administrative and technical capacity, regulatory clarity, and the availability of stable digital infrastructure. Such an assessmentensures that the implementation of DAOs is tailored to the community's real needs and guided by measurable goals such as transparency, participation, and service innovation. • Pilot: Municipalities can test the feasibility of DAO-based pilot projects in limited use cases, such as community events or participatory budgeting. These pilots should evaluate whether contextual conditions such as stakeholder readiness, technical capacity, and governance complexity align with the affordances of DAO-based systems. Municipality can then gather user feedback and refine governance mechanisms before broader deployment. • Capacity: Raising awareness and providing hands-on training for public employees and citizens is essential for successfully adopting DAO technologies. Educational initiatives demystify technical concepts, encourage informed participation, and minimize resistance to new governance models. Where digital literacy or technical capacity is limited, municipalities should complement DAO-based approaches with more accessible participation tools to avoid exclusion and ensure broad engagement. Keywords Decentralized Autonomous Organizations, e-Participation, Citizen Engagement, Digital Democracy, Blockchain 1 Introduction Society is showing a growing interest in digital empowerment and new ways to participate (Mäkinen, 2006; Mossberger, et al., 2007; Choi, 2016). At the same time, there is a growing need for collaborative networks where businesses, public administration, and citizens can participate in decision-making (Bingham et al., 2005; Camarinha-Matos et al., 2019). However, traditional governance models often struggle to balance efficiency with inclusivity, which can result in low engagement, lack of trust, slow decision-making and increased inequality in access to digital tools (Bélanger & Carter, 2009; Pimenidis et al., 2011; Pérez-Morote et al., 2020). These issues make it difficult for communities to effectively involve citizens in decision- making, leading to less engagement and hindering the implementation of policies that address local needs. As a result, participatory governance is struggling to thrive in many communities. Decentralized Autonomous Organizations (DAOs) represent an emerging governance model that enables consensus-based decision-making in self-regulated ecosystems (Wright, 2020). DAOs function without conventional hierarchical power structures and are instead governed by a community through participatory processes facilitated by blockchain technology (Wang et al., 2019; Hassan & De Filippi, 2021). Their core mechanisms include smart contracts, transparent on-chain voting systems, and token-based incentive structures that enable decentralized decision-making while reducing the need for centralized oversight (Spychiger et al., 2025). These characteristics position DAOs as a potential solution for enhancing digital participation in governance, particularly at the municipal and regional levels (Diallo et al., 2018). Despite the potential of DAOs, research on their application in e-participation and administrative processes remains limited. While existing studies explore DAOs in contexts such as decentralized finance (DeFi) (Brennecke et al., 2022; Ellinger et al., 2024) and open-source development (Siu et al., 2022; Van Vulpen et al., 2024), their role in municipal decision-making and stakeholder inclusion is underexplored. Specifically, there is a lack of comprehensive models that explain how DAOs can facilitate democratic participation, increase transparency, and mitigate governance risks in public administration. Furthermore, empirical studies on the practical implementation of DAOs in local governance are scarce, leaving significant theoretical and methodological gaps in literature. To address these conceptual and theoretical gaps, this study develops illustrative scenarios to explore DAO-based governance in municipalities and investigates the following research questions: Under what conditions could DAOs meaningfully enhance participation in municipal governance, and what challenges and risks need to be taken into account? The remaining article is structured as follows: Section 2 outlines the research design, while Section 3 explores governance models for participatory processes. Section 4 introduces the two illustrative scenarios, developed through disciplined imagination, that apply DAO-based governance, followed by an evaluation of the findings in Section 5. Section 6 presents recommendations, and finally, Section 7 concludes with key insights and directions for future research. 2 Research Design This study follows a conceptual research approach as described by Meredith (1993) and Jaakkola (2020), which provides a structured methodology for synthesizing existing theories to develop new conceptual insights. Conceptual research, as defined by Gilson and Goldberg (2015), does not rely on empirical data but rather seeks to integrate and extend existing theoretical frameworks. Conceptual research does not seek to test hypotheses empirically but instead aims to generate theoretical frameworks and heuristic models that can guide subsequent empirical work (Gilson & Goldberg, 2015). Within this tradition, we employ disciplined imagination (Weick, 1989) and scenario-based conceptual exploration (Bradfield et al., 2005; Van der Heijden, 2005) as our methodological strategy. This involves constructing illustrative scenarios not as empirical case studies but as structured thought experiments. These scenarios allow us to contrast DAO-based governance with alternative models (Decidim, Crossiety), clarifying conditions of applicability, potential benefits, and inherent limitations. This approach is particularly suitable for emerging technologies such as DAOs, where empirical implementations are scarce and fragmented. Rather than providing evidence of “what is,” it seeks to illuminate “what could be” under specific boundary conditions, thereby offering conceptual clarity and a roadmap for future empirical inquiry. In line with Jaakkola’s (2020) common types of research design in conceptual papers, this study develops a conceptual model for DAO-based e-participation in municipal and regional governance. It aims to identify the relationships between key constructs that explain how DAOs function as self-regulated ecosystems for digital participation. By synthesizing interdisciplinary literature, the model delineates antecedents, mechanisms, and outcomes of DAO-based governance, establishing a nomological network around e-participation. In accordance with Meredith (1993), this research employs three key steps of conceptual analysis: (i) summarizing common elements across different works, (ii) contrasting their differences, and (iii) expanding conceptual knowledge. Jaakkola (2020) further supports this approach by emphasizing theory synthesis as a means of achieving conceptual integration across multiple domains. The focal phenomenon of this study is the use of DAOs for e- participation and stakeholder inclusion in administrative processes at municipal and regional levels. As Jaakkola (2020) notes, such a phenomenon is observable but not yet sufficiently addressed in existing literature. To establish a structured research process, the study is structured into three phases: Foundation: This phase synthesizes existing research on DAOs, e-participation, and administrative stakeholder inclusion. It involves identifying governance models from both blockchain-based and traditional participatory processes. We apply Meredith's (1993) conceptual method by summarizing key elements and contrasting different governance models to establish a foundation for integrating DAOs into municipal decision-making. Application: The second phase applies the developed conceptual models to analyze participation processes at the municipal and regional levels. This phase develops illustrative scenarios, developed through disciplined imagination (Weick, 1989), to explore the potential impact of DAO governance mechanisms in administrative settings. Rather than presenting empirical cases, these scenarios function as structured thought experiments that assess how DAOs might enhance participation, transparency, and stakeholder collaboration. Grounded in disciplined imagination, they highlight how DAO mechanisms could operate in practice and allow for systematic comparison with centralized participatory models. Evaluation and Recommendation: The final phase synthesizes insights from the scenarios to develop a structured conceptual model of DAOs adoption in municipal governance. It emphasizes the contextual factors that shape feasibility, identifies practical implications for policymakers and administrators, and highlights challenges such as digital divides, token concentration, and regulatory uncertainty. In addition, this phase proposes strategies to mitigate these barriers and outlines directions for future research on DAO-based participation. This conceptual and scenario-based design has two key strengths. First, it enables the systematic integration of fragmented literatures to develop theoretical clarity where empirical evidence remains scarce (Meredith, 1993; Jaakkola, 2020). Second, it employs disciplined imagination (Weick, 1989) and scenario analysis (Bradfield et al., 2005) to explore “what could be” under defined boundary conditions, thereby generating heuristic insights that can guide future empirical inquiry (Gilson & Goldberg, 2015). At the same time, the approach has limitations. Conceptual analysis cannot provide empirical generalizations (Jaakkola, 2020), and illustrative scenarios risk being misread as real-world cases (Bradfield et al., 2005). To mitigate this, we explicitly frame the scenarios as heuristic illustrations rather than empirical findings, clarifying their role in theory-building rather than empirical testing. By acknowledging these limits, the study ensures transparency about its scope and positions its contribution as a foundation for future empirical research. 3 Foundation: Governance Models for Participatory Processes 3.1 Decentralized Autonomous Organization A Decentralized Autonomous Organization (DAO) is a blockchain-based system that allows individuals to coordinate and self-govern through a set of pre-defined rules stored on a public blockchain, where the decentralized nature ensures that governance is independent of centralized control (Wang et al., 2019; Hassan & De Filippi, 2021; Santana & Albareda, 2022). DAOs represent a fundamental shift in how decision-making, governance, and resource allocation can be organized (El Faqir et al., 2020: Bellavitis et al., 2023). Instead of being controlled by a central authority, decision-making powers are distributed among participants, creating a more resilient and manipulation-resistant system (Wright, 2020). Transparency is a core feature, with all decisions and transactions recorded on a blockchain or similar open system, fostering trust among participants and reducing the need for external oversight (Lustenberger, Wollenschläger & Küng, 2024). Automation plays a key role, as rule-based programs, or smart contracts, execute predefined processes without human intervention, increasing efficiency and minimizing errors (Jentzsch, 2016; Santana & Albareda, 2022). Participation is encouraged through voting mechanisms that allow members or token holders to be actively involved in decision-making, fostering democratic and inclusive structures (Spychiger et al., 2025). Incentive mechanisms, such as tokens and rewards, motivate participation, encourage adherence to rules, and drive collective goal achievement. Fig. 1. Schematic Representation of a DAO A schematic representation of a DAO and its key elements is shown in Figure 1. The fundamental purpose of a DAO is to focus on shared value creation rather than self-interested profit (Lustenberger et al., 2025). Members collectively manage the organization and its assets through voting processes encoded in smart contracts, ensuring transparent and fair governance. In addition, DAOs can engage external service providers to deliver services to the organization and its stakeholders (Spychiger et al., 2024). Assets managed by DAOs range from cryptocurrencies and NFTs to tokens representing real-world physical assets. Decision-making within a DAO is initiated by community members who submit proposals (Zhao et al., 2022). To ensure relevance and prevent spam, many DAOs require governance tokens for proposal submission. The first stage of decision-making, known as sentiment analysis, involves community discussion and an off-chain straw poll, providing a cost-effective means of gauging support. The actual voting process takes place on-chain, using various mechanisms to define majority and quorum requirements. If a proposal is approved, smart contracts automatically execute the decision. In the case of complex disputes, DAOs implement decentralized conflict resolution mechanisms, such as token-based arbitration (Norta et al., 2015). In extreme cases, the community may choose to split into separate organizations to resolve governance disagreements. Despite their decentralized ideals, DAOs face several challenges in decision-making (Spychiger et al., 2025). Many organizations experience centralization, as control over decisions and code often remains with a small group, such as the core team (Axelsen et al., 2022; Peña-Calvin et al., 2023; Sun et al., 2024). In times of crisis, centralized decision-making is frequently reintroduced, undermining the DAO’s decentralized structure. The concentration of voting rights is another issue, as voting power is typically tied to token ownership, leading to plutocratic governance where a few wealthy stakeholders dominate decision-making (Campajola et al., 2022; Feichtinger et al., 2023; Han et al., 2023). This concentration of power can limit diversity and hinder the DAO’s long-term growth. Additionally, participation in DAO governance remains low, with studies showing an average participation rate of just 1.77% of token holders, raising concerns about the legitimacy and effectiveness of decision-making processes (Liu, 2023; Rikken et al., 2023). These structural weaknesses have led to governance attacks, where malicious actors exploit low participation and centralized voting power, sometimes leveraging flash loans to push through harmful proposals (Rikken et al, 2022). Higher engagement and broader participation could mitigate such vulnerabilities by allowing the community to detect and prevent attacks earlier. Practical examples of DAOs illustrate their diverse applications. CityDAO is a community- driven initiative for decentralized land management, enabling collective decision-making on property use. Gitcoin DAO supports open-source development by providing transparent, community-driven funding for projects that contribute to the public good. MolochDAO focuses on financing Ethereum infrastructure projects, allowing members to collectively allocate resources for technological innovation. Beyond these cases, DAOs have the potential to revolutionize various sectors. In the context of this study, they offer promising solutions for increasing citizen participation in urban planning. These technologies can increase transparency, reduce the risk of fraud, and build trust in participatory budgeting processes (Ietto et al., 2023). Blockchain-based platforms, such as the BBBlockchain1 project in Berlin, can improve citizen participation in urban development projects by prioritizing values such as transparency, inclusiveness, and confidentiality (Hasler et al., 2017; Muth et al., 2019). Digital tools, including blockchain, can reshape planning processes by facilitating better information 1 https://bbblockchain.de/ exchange between urban planners and citizens, leading to more sustainable and responsive urban development (Renyi et al., 2020). However, the success of these technologies depends on factors such as citizen participation rates and addressing potential limitations (Renyi et al., 2020; Ietto et al., 2023). Overall, DAO-based approaches show potential to promote inclusive, data-driven urban planning by enabling communities to participate in decisions about resource allocation and infrastructure development. 3.2 Centralized Governance Models In addition to decentralized governance models, there are also centralized models that focus on structured communication and participation within local communities. Research by Renyi et al. (2020) emphasizes that digital tools designed for community collaboration can promote shared responsibility, co-production, and reciprocity, thus strengthening local engagement and social cohesion. The study emphasizes that digital platforms for community collaboration play a crucial role in organizing communication, coordinating activities, and supporting participatory governance mechanisms. One such example of a platform is Crossiety2, developed in Switzerland to support local networking and community interaction. According to Crossiety, the platform functions as a "digital village square," enabling citizens, businesses, and local administrations to exchange information, coordinate activities, and engage in decision-making. It integrates tools such as news updates, forums, event calendars, polls, and group chats to facilitate systematic communication within the community. Crossiety has proven successful in several Swiss municipalities, where it strengthens citizen participation by involving residents in urban projects, improving communication between citizens and city administrators, and encouraging engagement in local decision-making. In Zofingen, for example, Crossiety fosters citizen involvement in urban planning projects, while in Uetikon am See, it helps organize local activities and build social cohesion. In Baden, it facilitates the integration of new residents into the community through information sharing and collaborative projects. These implementations reflect Renyi et al.’s (2020) assertion that localized digital engagement tools are essential for effective community participation. Crossiety is particularly well-suited for smaller, locally focused initiatives that prioritize communication and collaboration within the community. Its structured and user-friendly design enables municipalities to organize local events, conduct surveys, and share important information with citizens, without requiring advanced technical knowledge. This makes it a valuable tool for promoting inclusive participation and citizen engagement in local governance (Leimeister, 2014). Another example of a digital platform is Decidim3, which is designed to support participatory democracy at various levels of government, ranging from local to national. As an open-source platform, Decidim enables structured participation by providing transparent records of proposals, discussions, and voting processes. This ensures that citizens can track and contribute to public decision-making (Barandiaran, 2019). The platform’s modular and adaptable framework allows it to be customized for a range of government applications, from urban planning to national policy discussions (Aragón et al., 2017). Decidim empowers citizens by enabling them to submit proposals, engage in policy discussions, and participate directly in municipal projects, thus reinforcing inclusive governance. One of the key features of Decidim 2 https://www.crossiety.ch/ 3 https://decidim.org/ is its emphasis on transparency, which fosters public trust by making government actions more understandable and accessible. Research shows that digital participatory platforms like Decidim can significantly improve political inclusion and citizen participation in policy development (Aragón et al., 2017). Decidim has been successfully implemented in over 450 instances across 30 countries, with notable examples in cities like Barcelona, Helsinki, and Mexico City (Barandiaran, 2019). In Barcelona, for instance, the platform facilitated citizen involvement in urban planning by allowing the public to submit and vote on urban project proposals. In Helsinki, Decidim was used for municipal planning and policy development, increasing transparency and public acceptance. In Mexico City, it strengthened citizen participation in urban and policy development, helping bridge the gap between government and the public. The platform’s focus on structured deliberation also encourages thoughtful decision-making. A case study of Decidim in Barcelona found that the platform’s interface effectively promoted discussion by combining discussion threads and indicators to guide recommendations (Aragón et al., 2017). This aligns with broader findings in digital participatory democracy, which suggest that well-structured platforms like Decidim significantly improve citizen engagement and collective decision-making. Overall, Decidim’s flexibility and focus on participatory democracy make it an ideal solution for promoting citizen engagement in a wide range of governmental contexts, from local urban planning to national policy formation. 4 Application: Illustrative Scenarios 4.1 Public Park In our first illustrative scenario, developed through disciplined imagination (Weick, 1989), a city administration in Switzerland is tasked with redesigning an existing Public Park and aims to actively involve citizens in the decision-making process. Although the park serves as a central meeting place, previous planning efforts were conducted without sufficient citizen participation, leading to dissatisfaction and frequent conflicts. As a result, many residents feel disconnected from the space, and its potential as a vibrant public area remains unfulfilled. To address this issue, the city administration seeks to redesign the park in a way that reflects the needs and wishes of the entire population, thereby increasing both acceptance and satisfaction. The goal is to establish a transparent, participatory, and democratic decision-making process that moves beyond merely informing citizens and instead actively involves them in shaping the project. However, there is currently no modern digital tool in place that allows for broad and effective citizen engagement, making it difficult to ensure that all relevant voices are heard and considered. To find the most suitable platform for facilitating participation, the city administration evaluates three options: Decidim, Crossiety, and a DAO-based solution. Decidim offers the necessary tools for active citizen involvement, including proposal submissions, voting mechanisms, and discussion forums. These features enable a structured and transparent decision-making process where citizens can contribute their ideas, debate different perspectives, and vote on key aspects of the park's redesign. Crossiety, on the other hand, focuses more on local networking and simple communication. While it supports community engagement, it lacks the depth required for a comprehensive participatory process. In addition to these platforms, the city administration considers a DAO-based solution, which would allow for decentralized governance using blockchain technology. The DAO model could enhance transparency and automate decision-making through smart contracts, ensuring that citizen votes are recorded immutably and that the process remains tamper-proof. However, the complexity of blockchain governance, potential legal uncertainties, and the technological knowledge required for citizens to participate effectively present significant barriers. While a DAO might offer long-term benefits in certain governance scenarios, it is deemed impractical for this project, as it could discourage broad public involvement rather than encourage it. Another key consideration is customizability. As an open-source platform, Decidim can be tailored to the specific needs of the city administration, ensuring that participation processes align with local requirements. Crossiety, by contrast, is a preconfigured platform with limited flexibility in terms of customization, making it less adaptable for complex participatory projects. The DAO-based solution, while theoretically highly customizable, would require significant technical expertise to implement and maintain, making it a resource-intensive option. In terms of costs and required resources, Decidim presents a technically demanding implementation, requiring expertise to set up and manage. However, its long-term cost efficiency and robust functionality make it a viable solution for a project of this scale. Crossiety, while easier to implement and requiring less technical know-how, does not provide the extensive participatory options necessary to engage citizens meaningfully in the redesign process. A DAO-based approach, while offering high transparency, would involve substantial initial development costs and ongoing management complexity, making it less suitable for this specific use case. After evaluating all three alternatives, the city administration concludes that Decidim is the best-suited platform for the project. Its ability to actively and comprehensively involve citizens in decision-making is essential for ensuring broad acceptance and long-term success. By offering a flexible, transparent, and cost-efficient solution, Decidim enables a participatory planning process that fosters trust, collaboration, and a stronger connection between residents and their public spaces. While a DAO-based solution could provide transparency and automation benefits, its complexity and accessibility challenges make it less appropriate for this particular context. Thus, Decidim is chosen as the optimal tool to achieve the project's goals effectively. 4.2 Beautification Association Our second illustrative scenario concern a Beautification Association (in German ‘Verschönerungsverein’) in Switzerland that faces the challenge of demographic change and the difficulty of attracting younger members. Many associations struggle with an aging membership base and have limited success in engaging younger generations, particularly in the context of digital transformation (Sladek, 2007). To remain relevant and inclusive, the association seeks to organize its activities in a more community-oriented manner and enhance members' participation in decision-making processes. By making the association’s work more visible and accessible to all generations, the goal is to strengthen engagement and ensure long- term sustainability.

To achieve these objectives, the association aims to introduce transparent, participatory, and democratic decision-making processes that reflect the ideas and needs of its members. A major hurdle, however, is the lack of modern, engaging, and interactive methods to involve the community in these processes. Instead of merely providing passive information, the association seeks to encourage active participation in discussions and decision-making – ideally through digital means. The association considers that DAOs offer an innovative approach to achieving these goals by enabling decentralized and transparent decision-making. This makes them particularly well- suited for associations that prioritize active member participation and transparency, as they facilitate a more inclusive and accountable governance structure (Bonnet & Teuteberg, 2023; Laturnus, 2023). The adoption of a DAO could offer several advantages. Firstly, it is well- suited for long-term projects that require ongoing transparency and involvement. Secondly, administrative processes and decision-making can be automated, reducing bureaucratic workload and improving efficiency. Thirdly, blockchain-based voting and smart contracts allow real-time engagement, encouraging higher levels of participation. Additionally, decisions can be made without a central authority, fostering trust and inclusivity among members. However, while a DAO can improve transparency, efficiency, and participation, it is important to consider the initial setup costs and the need for specialized expertise in its implementation (Caviezel et al., 2023; Schmitten et al., 2023). A structured approach to implementing a DAO can be supported through the DAO Design Canvas, a strategic management tool specifically designed to plan, develop, and manage DAOs (Lustenberger, Spychiger et al., 2024) [52]. Inspired by the Business Model Canvas by Osterwalder and Pigneur (2010) [53], the DAO Design Canvas breaks down the complexity of DAO creation into clear, manageable sections of three constituent elements (purpose, legislation, business case) and five structural elements (organizational bodies, decision-making, token, treasury, communication). The primary purpose of the Beautification Association is to address demographic change and attract younger members. It seeks to create a community-oriented organization where all members can actively participate, ensuring that its work remains relevant for all generations. The association is committed to reflecting the values and interests of all its members, emphasizing community, transparency, and co-determination, particularly for younger participants. Key challenges include an aging membership base, the lack of modern engagement methods, and the need to shift from passive to active participation to maintain motivation and loyalty among members. Legally, the association will continue as a democratically organized, non-profit entity while modernizing its structure to align with community-oriented objectives. It must comply with Swiss association laws, necessitating the establishment of a compliance team to oversee financial reporting, ensure decision-making transparency, update the association’s statutes as required, and manage assets responsibly. The DAO model supports several core functions of the association. Community projects aimed at beautifying public spaces and parks will be enhanced through a participative digital platform where members can propose, discuss, and vote on initiatives. The association remains open to all regional residents, fostering a sense of belonging and encouraging co-determination in shaping the organization’s future. The organizational structure of the DAO requires at least two key bodies: the General Assembly and the Board of Directors. The General Assembly serves as the highest authority, responsible for approving statutes and electing the Board, while the Board manages operations and external representation. Additional teams may be formed as needed, with membership subject to time limitations and financial allocations for self-governance. Decentralized coordination mechanisms ensure transparent voting processes using user- friendly platforms such as Snapshot, which does not require extensive technical knowledge. To prevent complete reliance on smart contracts, simpler tools will be used for decision-making. Open membership allows any interested individual to join and participate in votes, ensuring broad engagement. Online discussion forums enable proposals to be debated before voting, fostering informed decision-making. A quorum of at least 30% of members is required for votes to be valid, ensuring that decisions reflect collective will rather than a small minority. Each member has equal voting rights, maintaining fairness and simplicity in the decision-making process. The DAO will introduce governance and reward tokens to incentivize participation. Governance tokens grant voting rights, with each member receiving a set number upon joining, which are then used in decision-making. Reward tokens, distributed for active involvement in projects and events, can be redeemed for association activities or special offers, further encouraging engagement. Financial management will be conducted through a multi-signature wallet, ensuring that no single individual has control over resources. Using platforms like Gnosis Safe, financial transactions will require multiple signatures from elected representatives. The DAO will define the types of assets held, including stablecoins for value stability and governance tokens for participation. Members can propose financial expenditures via platforms such as Aragon or Snapshot, followed by public discussions and votes. Approved proposals trigger fund releases from the multi-signature wallet, with all transactions logged onto the blockchain for transparency. Regular financial audits and blockchain-based reporting tools will ensure accountability and security. Effective communication is crucial for the success of the DAO. A dedicated platform such as Discord or Telegram will serve as the primary hub for discussions, announcements, and voting. Additionally, asynchronous platforms like Discourse or dedicated forums can enable structured, in-depth discussions. For key decisions, blockchain-based communication tools such as Snapshot and Aragon will be employed to guarantee transparency and traceability. By leveraging a DAO model, the Beautification Association can modernize its governance structure, enhance transparency, and increase member engagement. While implementation requires careful consideration of costs and expertise, the potential benefits in terms of efficiency, participation, and long-term sustainability could make this an attractive option for revitalizing community organizations in the digital age. However, further exploration and experimentation would be required to determine whether such an approach truly aligns with the association’s needs and capabilities. 5 Evaluation The concept of implementing decentralized governance models, particularly through blockchain and DAOs, has gained significant traction as a means of increasing transparency, member participation, and overall efficiency in various organizational settings (Muth et al., 2019; Rikken et al., 2022; Ietto et al., 2023). The advantages of DAOs are particularly evident when viewed in the context of organizations such as community associations, where long-term cooperation, continuous decision-making, and active involvement from members are crucial for sustainability (Laturnus, 2023). DAOs offer a unique approach to governance by providing decentralized decision-making, which in turn fosters transparency, accountability, and trust among members (Lustenberger, Wollenschläger & Küng, 2024). The use of blockchain technology ensures that all transactions and decisions are publicly visible and immutable, creating a reliable foundation for members to engage with the organization in a transparent and accountable manner (Wright, 2020). It is important to note, however, that the insights presented here are based on conceptual scenarios rather than empirical testing; they therefore highlight potential boundary conditions and conceptual implications rather than definitive outcomes. One of the main benefits of DAOs is the opportunity for efficient and transparent decision- making processes (Bellavitis et al., 2023). Through decentralized coordination and the automation of key functions, such as voting and fund distribution via smart contracts, DAOs can facilitate quick, democratic, and transparent decision-making. This enables members to actively participate in shaping the direction of the organization, resulting in greater member involvement and stronger identification with the organization’s goals. This feature can be particularly beneficial for associations aiming to attract younger generations who are often more comfortable with digital tools and decentralized structures. DAOs, by leveraging digital platforms and smart contract functionality, provide an attractive model for increasing member engagement and streamlining administrative processes, ultimately reducing costs associated with traditional management and operations. At the same time, these benefits must be viewed as conditional rather than universal: DAOs are not a one-size-fits-all governance solution and may only be appropriate under specific organizational and contextual conditions. Furthermore, while DAOs offer promising advantages, they also present challenges that need to be carefully considered (Wang et al., 2019; Santana & Albareda, 2022; Rikken et al., 2023; Spychiger et al., 2025). One of the main drawbacks is the technical complexity and resource requirements associated with setting up and maintaining a DAO. Smaller associations, particularly those without technical expertise or the financial resources to hire specialized staff, may find it difficult to adopt and manage a DAO structure effectively. Furthermore, legal uncertainties surrounding the DAO model present an additional challenge, particularly in jurisdictions where the regulatory framework for DAOs is unclear or still evolving. Without a clear legal structure, it may be difficult for associations to fully integrate DAOs into their operational framework, which could lead to potential legal risks or complications. A potential mitigation strategy is the use of “regulatory sandboxes” or experimental legal frameworks that allow municipalities to test DAO models within safe legal boundaries. Another significant challenge lies in the diversity of the member base, particularly when it comes to older or less tech-savvy members. For such individuals, the technical nature of DAOs could present a barrier to participation, potentially alienating a portion of the community. In these cases, it may be necessary to provide additional support and education to ensure that all members can engage in the decision-making processes on equal terms. Complementary measures such as simplified user interfaces, digital literacy workshops, or hybrid participation models that combine DAO processes with more accessible platforms (e.g., Decidim or Crossiety) could help reduce exclusion. Moreover, dependence on technology presents its own set of risks. A DAO’s reliance on blockchain and digital tools means that technical failures, such as network errors or hacking incidents, could jeopardize the integrity and functioning of the organization. This reliance on technology further underscores the importance of robust infrastructure and security measures to ensure the long-term viability of the DAO. Table 1 summarizes key challenges in designing, implementing, and sustaining DAO-based governance within municipal and associative contexts, along with potential strategies to mitigate them. Challenge Mitigation Strategy Technical complexity Partnerships with civic tech providers; shared municipal infrastructure Legal uncertainty Regulatory sandboxes; pilot projects under association law Token concentration Quadratic voting; identity-based or membership-weighted tokens Digital divide Simplified interfaces; digital literacy workshops; hybrid participation models Technical risks Robust cybersecurity protocols; redundancy in infrastructure Table 1: DAO Challenges and Potential Mitigation Strategies In the context of a community association, such as the Beautification Association in a Swiss municipality, the advantages and challenges of adopting a DAO model become clearer when compared to other governance models. The association’s goal of increasing member participation, improving transparency, and ensuring efficiency in decision-making aligns well with the benefits offered by a DAO. By establishing a DAO, the association is able to automate many administrative tasks, such as financial transactions and membership management, through the use of smart contracts. Additionally, the DAO model allows for transparent and inclusive decision-making, with members able to propose and vote on initiatives, ensuring that all voices are heard and that the organization remains responsive to the needs of its members. The use of member tokens further strengthens participation, as these tokens represent voting rights and are tied to membership status, thereby incentivizing active engagement. Nevertheless, ensuring inclusivity requires conscious design choices, such as quadratic voting4 4 Quadratic voting allows members to allocate multiple votes to issues they care strongly about, but the cost of each additional vote increases quadratically (e.g., 1 vote = 1 credit, 2 votes = 4 credits, 3 votes = 9 credits). This mechanism helps balance majority rule with preference intensity and reduces the risk of wealthy participants dominating decisions (see: Lalley & Weyl, 2018). or identity- and membership-based tokens, to prevent token concentration and to maintain equal opportunities for engagement across diverse member groups. Despite these advantages, the implementation of a DAO in a municipal context, particularly for a one-off project like the redesign of a public park, is less appropriate. The park project, with its localized scope and relatively straightforward decision-making process, does not require the complex governance structures that a DAO entails. The costs and technical resources involved in setting up a blockchain-based DAO would be disproportionate to the needs of the project. In this case, using more centralized and simpler digital platforms, such as Crossiety or Decidim, would be more efficient and cost-effective, as they are better suited for managing smaller-scale, one-time initiatives that do not necessitate the ongoing, long-term cooperation that DAOs are designed to support. Rather than constituting empirical findings, the following insights should be understood as conceptual propositions derived from scenario-based analysis. The comparison between the Beautification Association and the Public Park project highlights the fundamental question of when the use of a DAO is truly beneficial, and the two scenarios together yield several practical lessons that further clarify the contextual conditions under which DAOs are likely to be valuable. DAOs are best suited for long-term, ongoing projects that require high levels of transparency, member engagement, and automated processes, particularly in settings characterized by ongoing collaboration among multiple stakeholders, repeated decision cycles, and a need for transparent and rule-based resource allocation – conditions clearly evident in the Beautification Association scenario. For associations that require decentralized decision- making and where member participation is critical, a DAO provides a robust framework to ensure that all members are involved in the governance process. Conversely, for short-term, localized projects with simpler decision-making structures, the DAO model may be overly complex and costly, and more accessible participatory platforms such as Decidim or Crossiety remain more suitable alternatives. Successful DAO implementation is expected to depend on several antecedent conditions, including digital literacy among participants, administrative and technical capacity within the implementing organization, regulatory maturity, and the availability of stable digital infrastructure. Where these conditions are weak or unevenly distributed, DAO use becomes less feasible. Moreover, the automation and immutability afforded by DAOs provide meaningful added value only when the scope, duration, and complexity of a governance task justify the corresponding technical and organizational overhead. This conceptual analysis therefore suggests that DAOs are ideally understood as contextual governance instruments whose applicability depends on organizational goals, digital infrastructure and socio-demographic context, and the broader alignment between task characteristics and technological affordances. Although the illustrative scenarios presented here are situated in Swiss municipalities, similar patterns can be expected in other local governance contexts, as shown by cases such as Decidim in Barcelona, Helsinki, and Mexico City. The insights derived from these scenarios therefore offer more fine-grained and context-sensitive criteria for assessing the appropriateness of DAOs in municipal and associative governance. 6 Recommendations Municipal administrations considering the integration of DAOs into their governance and citizen participation structures can follow a structured approach to understand the potential benefits and challenges. Below are tailored recommendations that can guide the process of adopting DAOs at the municipal level: The first step is a comprehensive needs analysis to understand the specific challenges faced by the commune and its citizens. Conducting workshops or surveys with citizens, local stakeholders, and other relevant parties will help identify the most pressing needs and how a DAO could address them. This step also involves setting clear, measurable goals for implementing DAOs, such as improving transparency, enhancing citizen participation, or fostering innovation within municipal administration. In addition to these steps, municipalities should consider several independent variables that condition whether DAO implementation is feasible in the first place. These include the digital literacy of the population, the municipality’s administrative and technical capacity, the maturity of the legal environment, and the expected complexity and duration of the governance task. These variables function as preliminary decision criteria: DAOs offer advantages when governance processes require long-term coordination, transparent fund handling, or automated rule execution, whereas platforms such as Decidim or Crossiety remain preferable when low technical barriers and broad accessibility are essential. Education and awareness-raising initiatives are crucial to demystifying the concept of DAOs for both citizens and local government employees. Organizing information events or webinars can help explain how DAOs work and the potential benefits they bring, particularly in the context of enhancing e-participation. Additionally, offering targeted training sessions will ensure that both citizens and local government staff have the necessary knowledge to engage with and utilize DAO technologies effectively. Following education efforts, municipalities should consider developing a prototype or pilot project as an initial step toward DAO implementation. A pilot project can be applied to a manageable area, such as organizing a community festival or planning a small community- driven project. The goal is to test the viability of DAO structures in a real-world setting, collect feedback from participants, and refine the system based on this input. Pilot projects also provide an opportunity to engage the community and showcase the benefits of a decentralized, transparent decision-making process. Stakeholder involvement plays a key role in the successful implementation of DAOs. Municipalities should create platforms and forums that encourage citizen contributions, allowing local businesses, NGOs, and other interest groups to provide ideas and feedback. Simple mechanisms, such as digital voting or suggestion functions, should be introduced to make it easier for citizens to participate in decision-making processes, further fostering a sense of co-determination and ownership over municipal affairs. A transparent governance structure is essential for any DAO. The municipality must develop clear rules and regulations that define the roles and responsibilities of participants. Ensuring that decisions are traceable, and that all relevant information is accessible in an understandable format will strengthen transparency and build trust in the system. To support the technical needs of the DAO, municipalities must choose an appropriate blockchain platform that is both user-friendly and tailored to the community's needs. It is also important to provide ongoing technical support to resolve any user questions or issues quickly, ensuring that the system remains functional and accessible for all users. Once the DAO is operational, municipalities should establish a system for regular evaluation. Conducting periodic reviews will allow the administration to assess the effectiveness of the DAO and gauge the level of citizen participation. Based on the feedback and results of these evaluations, the municipality can make necessary adjustments to improve the system and encourage even greater engagement. Finally, municipalities can promote innovation by organizing hackathons or competitions that encourage the development of new ideas for the use of DAOs in local government. Collaborating with technology start-ups or universities can also bring fresh perspectives and expertise, ensuring the continuous improvement of DAO structures within municipal administration. Taken together, these considerations provide a clearer basis for choosing between DAO-based governance and more conventional participation platforms. Rather than treating DAOs as universally applicable, municipalities can use the above criteria to identify cases in which the technology’s affordances align with local conditions and policy goals, thereby ensuring a proportionate and context-appropriate adoption strategy. 7 Conclusion The implementation of DAOs in municipal governance presents both opportunities and challenges. DAOs offer increased transparency, member participation, and cost efficiency, particularly for long-term, complex initiatives where decentralized decision-making and automation provide clear advantages. Their use in community associations and participatory governance models demonstrates the potential to strengthen citizen engagement and improve administrative processes through smart contracts and blockchain-based coordination. However, the suitability of DAOs depends on contextual factors, such as the presence of a dispersed and digitally literate member base, the need for decentralized governance, and the availability of technical and financial resources. It is also important to note that the findings of this paper are based on conceptual scenarios rather than empirical evidence, and should therefore be read as illustrative explorations of potential governance dynamics. Despite their benefits, DAOs introduce significant challenges. The technical complexity of setting up and maintaining a DAO may limit its accessibility for smaller organizations and municipalities with limited expertise. Legal uncertainties and evolving regulatory frameworks pose additional risks, requiring careful consideration before adoption. Furthermore, the digital divide may hinder inclusive participation, as older or less tech-savvy members may struggle to engage with blockchain-based decision-making processes. These limitations underscore that DAOs cannot be viewed as universal governance solutions. They require careful institutional design and complementary measures such as hybrid participation models, digital literacy programs, and regulatory sandboxes to mitigate risks and ensure inclusivity. Ultimately, while DAOs have the potential to transform administrative processes at the municipal level, they should be regarded as contingent governance tools: valuable under specific boundary conditions but not universally applicable. Their benefits emerge most clearly in contexts where transparency, automation, and distributed participation are critical, while in simpler, localized projects, more conventional tools may remain preferable. The identification of these contextual conditions also clarifies more concretely when DAOs are likely to add value in municipal governance, contributing to a more actionable and context-sensitive framework for practitioners and future empirical studies. Our contribution is twofold: conceptually, we provide a structured model and illustrative scenarios that clarify under what boundary conditions DAOs may add value; practically, we offer municipalities a set of strategies to weigh opportunities against risks and to determine whether their organizational, socio-technical, and regulatory conditions are sufficient for DAO adoption. These contributions are intended to generate testable hypotheses and guide future empirical research, rather than to advance validated causal claims. This ensures that DAOs are not viewed as universal solutions but as context-dependent governance tools that must be complemented by inclusivity measures, regulatory clarity, and hybrid approaches. While the illustrative scenarios focus on Swiss municipalities, they should be read as heuristic examples rather than generalizable empirical findings. Similar challenges and opportunities arise in other contexts where participatory platforms such as Decidim (Barcelona, Helsinki, Mexico City) or blockchain-based initiatives (Berlin) are deployed. This highlights that while local conditions shape implementation, the broader trade-offs identified here resonate across diverse governance contexts. Future comparative research should therefore investigate and empirically test how contextual variables such as socioeconomic structure, digital infrastructure, legal frameworks shape the viability of DAOs in local governance worldwide. Additionally, further empirical studies are needed to assess the long-term impact of DAOs on community governance. Comparative case studies analyzing different governance models in municipalities could provide valuable insights into when DAOs offer tangible benefits over traditional or hybrid governance structures. Additionally, exploring regulatory developments and potential legal frameworks for municipal DAOs could help address existing uncertainties. Investigating ways to bridge the digital divide and enhance accessibility would also be crucial for ensuring the inclusive application of DAOs in local governance. Building such an empirical evidence base will be critical to validating — or challenging — the conceptual insights developed in this paper. Acknowledgments The generative AI tool ChatGPT 4.0 was used solely for language refinement and writing assistance. No AI-generated content contributed to the conceptual development, data analysis, or substantive findings of this study. Statements and Declarations Ethical considerations Not applicable Consent to participate Not applicable Consent for publication Not applicable Declaration of conflicting interest The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article. 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Sabrina Wollenschläger is a researcher at the Lucerne University of Applied Sciences and Arts (HSLU) in Switzerland. Her work focuses on blockchain governance, Decentralized Autonomous Organizations (DAOs), and their application in public sector innovation. She has co-authored studies on DAO design and digital participation, exploring the intersection of technology and collaborative governance.