The De-Central Bank in Decentralized Finance: A Case Study of MakerDAO

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2022-01-04

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Countless decentralized finance (DeFi) applications of the past years have suffered from the high volatility and speculative behavior surrounding their underlying crypto assets. While the academic debate has been flourishing in these areas, Decentralized Autonomous Organizations (DAOs) have not received as much attention. This is the case even though they could offer an opportunity to solve some of the underlying problems of existing cryptocurrencies and ecosystems, for example, by providing lower volatility and, thus, exchange rate stability. This paper presents an economic analysis of the MakerDAO, a DAO in DeFi. In doing so, we use a single case study methodology based on existing resources and expert interviews. It also uses monetary theory instruments to provide researchers and developers with insights into how DAOs are governed. Further, it serves to illustrate how IS research may support the development of future IT artifacts aimed at offering the infrastructure for DeFi applications.

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Blockchain Cases and Innovations, blockchain, decentralized autonomous organization, defi, monetary theory, stablecoin

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10 pages

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Proceedings of the 55th Hawaii International Conference on System Sciences

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Attribution-NonCommercial-NoDerivatives 4.0 International

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