The recent launch of the Ethereum blockchain platform has triggered the interest in the decentralized
autonomous organizations (DAOs). DAOs aim to become businesses residing on the blockchain, investing
their funds obtained through initial token offerings. These tokens entitle the owner to vote on investment
and management decisions of the DAO and to obtain eventual dividend. In this paper, I discuss
several issues that stem from the organizational design of the DAO, that can potentially lead to DAO’s
organizational and functional breakdown. While some originate in the voting mechanism itself, other
emerge through the misalignment of interest between the DAO and the project or service provider. I also
discuss the impact on the token price and a bit of a legal perspective on the matter.