Two researchers at the University of Texas at Austin and Princeton University conducted a study to understand the impacts of tokenization on decentralization of decentralized autonomous organizations (DAOs). After modelling the various possible DAO scenarios over time, their primary results indicated that tokenization serves to transition the privileges from original shareholders to a platform’s users. Still, one downside to implementing tokenization is that there cannot be any single entity to back up all participations in a given network. In fact, explains lead researcher Michael Sockin, this offers demerits “So that takes us backwards to being Amazons and Apples; it is the very problem that everyone was wanting to move away from.” It was also evident that such a design is more vigilant when grouped around dedicated contributors. “Additionally, tokens perform as votes and everyone keeps a check to prevent people who maintain the DAO from parsing trust from other participants. Tokens instead indicate benefit, rather than as securities to dictate their possessions.”
