Programmable governance and institutional design in decentralized autonomous organizations: a comparative study of RARI DAO, Arbitrum DAO, and Optimism DAO

Decentralized autonomous organizations (DAOs) represent one of the most consequential experiments in organizational design to emerge from blockchain technology. By encoding governance rules into smart contracts and recording every vote, proposal, and treasury decision immutably on-chain, DAOs offer globally distributed communities a high degree of transparency and accountability in collective decision-making. This study examines governance design and participatory innovation across three DAOs: RARI DAO, Arbitrum DAO, and Optimism DAO. Each has taken a distinct structural approach to the problem of collective decision-making at scale. Using a qualitative comparative case study method, the research draws on governance forum discussions, proposal records, and official documentation, analyzed through thematic coding and cross-case comparison. The theoretical frame draws primarily from Ostrom’s (1990) commons governance principles, with Scott’s (1995, 2014) institutional theory and Donaldson’s (2001) contingency theory applied as supplementary analytical lenses. Across all three cases, the findings indicate the emergence of increasingly formalized governance architectures designed to balance decentralization, coordination efficiency, and operational security. Communities building governance infrastructure from scratch, iterating rapidly in response to community feedback, and developing structural solutions: delegate incentive programs, participation incentive mechanisms, bicameral legitimacy systems, constitutional frameworks, and dedicated legal entities that represent an emerging configuration of governance mechanisms. Two cross-case findings are particularly notable. First, all three DAOs independently converged on a three-body governance architecture comprising a legal foundation, a security council, and token-holder governance — suggesting that similar governance problems, encountered in similar technical and legal environments, tend to produce similar structural solutions. Second, while these architectures are structurally similar, they differ significantly in how governance processes are implemented in practice, reflecting differences in scale, formalization, and community context. These findings contribute to the literature by providing a structured cross-case analysis of DAO governance design and offering practical insights into programmable institutional design and blockchain-enabled coordination systems.

Since the early days of Ethereum, decentralized autonomous organizations have demonstrated that on-chain governance is not only technically feasible at scale but capable of governing billions of dollars in assets, funding public goods, and coordinating protocol upgrades across thousands of participants worldwide. The on-chain governance record underpinning these organizations is itself a structural innovation: every proposal, every vote, every treasury allocation is recorded immutably on the blockchain — visible to anyone, verifiable by anyone, and resistant to revision by any central authority. Traditional organizations produce governance records that are selectively disclosed and often invisible to most stakeholders. DAOs produce governance records that are public by default (Hassan and De Filippi, 2021; Meneguzzo et al., 2025).

The scale of DAO governance activity has expanded significantly. DAOs now collectively manage billions of dollars in assets. Governance structures have evolved rapidly: from simple token-weighted voting to layered delegate systems, constitutional frameworks, bicameral legitimacy structures, staking-based participation incentives, and dedicated legal entities bridging on-chain governance with real-world legal requirements. The pace of institutional experimentation within DAO governance systems has accelerated rapidly over a relatively short period (Fritsch et al., 2024; Sharma et al., 2024).

The structural challenges that remain are sustaining broad participation, distributing voting power more evenly, and aligning governance timelines with operational needs. These challenges reflect ongoing tensions between decentralization, participation, and operational efficiency (Olson, 1965; Ostrom, 1990), and the communities building it are identifying, documenting, and iterating on those challenges faster than almost any comparable organizational form in history.

Recent scholarship has begun to treat DAOs as digitally enabled commons that can be studied through the same theoretical lenses applied to cooperatives, open-source projects, and common-pool resource governance (Esposito et al., 2025; Hassan and De Filippi, 2021). More recent work has also examined DAOs as a distinct organizational form, highlighting the governance and institutional challenges that emerge when coordination is distributed across blockchain-based communities (Davidson, 2025). Case studies of MakerDAO have documented how voting coalitions form and how governance structures adapt (Sun et al., 2022). Researchers have proposed governance metrics such as proposal throughput, participation rates, treasury efficiency as proxies for organizational health (Meneguzzo et al., 2025). What remains underdeveloped is rigorous comparative analysis across DAOs that covers the same variables systematically and situates findings within broader organizational theory. This gap in rigorous comparative DAO governance analysis is what this article attempts to fill.

The three cases examined here, RARI DAO, Arbitrum DAO, and Optimism DAO, were selected to maximize variation on governance innovation type while maintaining comparability on eight key structural variables: legal entity structure, Security Council architecture, proposal process and submission thresholds, quorum thresholds, voting mechanism, staking and delegate incentive programs, treasury scale and governance, and governance stress tests. RARI DAO is a lean on-chain governance model in the non-fungible token (NFT) and creator economy space that launched a native governance staking program in June 2025 via the Tally Protocol — the first among three cases examined in this study to do so. Arbitrum DAO governs approximately $1.4 to $1.8 billion under a formal written constitution and approved a comparable staking mechanism in 2024, though deployment remained pending at the time of this study (Bench, 2024). Optimism DAO governs approximately $1.4 billion through a bicameral system without precedent in the governance literature. MakerDAO and Uniswap, while prominent, were excluded because their governance structures are already extensively documented, reducing the marginal contribution of additional case analysis.

This article addresses three research questions: (1) What governance structures have RARI DAO, Arbitrum DAO, and Optimism DAO developed to address collective decision-making at scale? (2) How do governance incentive programs function as governance infrastructure across different community contexts? (3) What structural convergences and divergences emerge across the three cases, and what do they suggest for governance design more broadly? The research makes three primary contributions: a structured cross-case analysis of DAO governance design across multiple major ecosystems; an extension of Ostrom’s commons governance framework, along with institutional and contingency theory, into blockchain-native settings; and a comparative framework for analyzing governance architecture that offers practical insights for DAO builders designing or iterating governance systems.

The methodological approach was guided by the exploratory and context-dependent nature of decentralized autonomous organizations (DAOs). Because governance dynamics in DAOs are shaped by community structure, institutional evolution, technical infrastructure, and ecosystem-specific governance practices, a qualitative comparative case study design was considered the most appropriate methodological framework. Qualitative case study research is particularly suitable for examining complex organizational systems in which context forms part of the explanation and where governance processes cannot be meaningfully reduced to standardized quantitative variables alone (Rashid et al., 2019).

This study examines three DAO governance systems, RARI DAO, Arbitrum DAO, and Optimism DAO, selected through purposive case selection. The cases were chosen to maximize variation in governance architecture and participatory innovation while maintaining comparability across key governance dimensions. Selection criteria included: (1) the presence of formalized governance structures, (2) active governance participation systems, (3) publicly accessible governance records, (4) distinct approaches to incentive design and delegation, and (5) variation in treasury scale, institutional complexity, and governance implementation models.

The three selected cases represent distinct governance coordination approaches within blockchain ecosystems. RARI DAO represents a relatively lean governance structure emphasizing governance staking and delegation incentives. Arbitrum DAO reflects a constitutionally structured governance model operating at significantly larger treasury scale and institutional complexity. Optimism DAO introduces a bicameral governance framework combining token-based governance with identity-based governance mechanisms. Together, the cases provide variation across governance implementation models while remaining comparable as large-scale blockchain-native governance systems.

Data sources included official governance forums, DAO constitutions, governance documentation, proposal archives, on-chain voting records, treasury governance records, and governance dashboards associated with each DAO. Supplementary materials included industry research reports, governance analyses, and peer-reviewed academic literature on blockchain governance and decentralized coordination systems. Data collection covered governance activity and publicly available records from each DAO’s formation through 2025.

Triangulation was achieved through the comparison of governance forums, on-chain governance records, constitutions, governance proposals, and secondary industry analyses. The use of publicly verifiable on-chain governance records strengthened transparency and reduced reliance on self-reported organizational narratives. The theoretical framework draws primarily from Ostrom’s (1990) commons governance principles, which provide an analytical framework for examining collective-choice arrangements, participation incentives, monitoring systems, and governance rule structures Scott’s institutional theory (1995, 2014) was applied as a supplementary lens to examine legitimacy formation and institutional convergence across DAO governance systems. Institutional theory suggests that organizations evolve in response to pressures for legitimacy, stability, and conformity within their broader environments. In this study, the framework helps explain why governance systems operating in different blockchain ecosystems may nevertheless converge toward similar institutional arrangements. Contingency theory (Donaldson, 2001) further informed the analysis by evaluating the relationship between governance design and organizational environment. Contingency theory argues that organizational effectiveness depends on the alignment between structural arrangements and contextual conditions rather than the existence of a single optimal governance model. This perspective helps explain variation in governance implementation across the three DAO cases. Data analysis followed a thematic coding process organized around two primary analytical categories: governance structure and participatory innovation. Themes were developed inductively through iterative review of governance documents, proposal discussions, delegate participation systems, governance incentive mechanisms, and constitutional frameworks. Coding focused on governance architecture, voting structures, delegation systems, treasury governance, participation incentives, implementation mechanisms, and institutional adaptation across cases. Cross-case comparison was conducted iteratively to identify recurring governance patterns, structural divergences, and institutional convergence across the three DAO ecosystems (Braun and Clarke, 2006; 2021). To reduce potential interpretive bias, findings were grounded primarily in publicly verifiable governance records, proposal archives, and cross-case comparative analysis. All primary governance records referenced in the study are publicly accessible through governance forums and on-chain governance systems, allowing independent verification of the evidence used in the analysis.

Several limitations should be acknowledged. First, governance forums and proposal systems capture public governance activity but do not fully reflect private coordination occurring through channels such as Discord or Telegram. Second, DAO governance systems evolve rapidly, meaning that governance structures and participation mechanisms may continue developing after the conclusion of data collection. Third, the study relies primarily on qualitative interpretation rather than quantitative governance metrics, limiting the ability to evaluate long-term governance performance outcomes statistically.

RARI DAO

RARI DAO governs the Rarible Protocol, an open-source infrastructure layer for building NFT applications, the RARI Chain, a royalty-enforcing Ethereum Layer 3 that went live in January 2024, and a community-controlled treasury (RARI Foundation, 2022). The stated mission is to accelerate the adoption of decentralized tools for creators and communities in Web3. The DAO operates at a smaller treasury scale than Arbitrum or Optimism, but has invested significantly in governance incentive design — particularly in making participation worthwhile for the entire delegation chain, from token holder to delegate. Everything runs through the $RARI token. Holders stake or lock tokens to acquire voting power, which they can exercise directly or delegate to community representatives. RARI DAO has built structural incentives that make participation worthwhile for the entire delegation chain, rather than treating participation as a voluntary civic act (RARI Foundation, 2025a).

Governance architecture

The proposal process follows the RRC (Request for Comment) framework, established in the DAO’s founding governance documents (Campbell, 2022). An idea begins in the governance forum, receives community discussion and revision, and eventually becomes an on-chain proposal requiring 15% veRARI/staked RARI quorum and a simple majority to pass. A token holder with 5,000 or more token voting power may submit a forum proposal; the quorum requirement serves as the community participation gate for on-chain execution. After a successful vote, a 2-day cooldown period allows the Security Council to review and cancel a proposal before execution if something looks wrong (RARI Foundation, 2025b; Tally, 2025).

The governance structure has three anchoring bodies. The RARI Foundation, a Cayman Islands entity, handles operational execution, implementing approved decisions, managing day-to-day functions, and submitting budget and upgrade proposals, while remaining legally obligated to act in the DAO’s interest (RARI Foundation, 2022). The Security Council is a multisig committee empowered to veto malicious proposals during the 2-day cooldown window or take emergency action if a security issue arises, with no policy role under normal governance conditions (RARI Foundation, 2025c). Together, the Foundation and Security Council form a complementary institutional layer: one handles routine execution, the other provides emergency oversight, while token-holder governance drives all substantive decisions. The delegate program represents a sustained governance investment. The original delegation incentives program launched in 2023, and by 2025 the DAO was on its second major iteration — RRC-40 and a subsequent v2.0 framework — rewarding delegates for on-chain voting, posting public rationales, and authoring proposals (Sixty et al., 2025; Stable Labs, 2023). Delegate profiles are publicly visible on governance platform, listing verifiable voting history, forum activity, and self-described expertise.

In June 2025, RARI DAO launched a native governance staking program, the first of the three cases examined here to deploy a live implementation of this governance model (RARI Foundation, 2025a). The program was approved via RRC-34 and funded via RRC-45, with 50,000 RARI dedicated to staking rewards across three seasons. Season 1 distributed 25,000 RARI proportionally to token holders who delegated to active delegates, defined as those who had voted at least once in the past 90 days. This design aligns incentives across the entire governance chain simultaneously: token holders are rewarded for delegating, delegates are rewarded for participating, and the DAO benefits from higher engagement. Research on analogous reward structures has found that monetary incentives for governance participation can meaningfully increase delegation, with effects strongest among smaller token holders (Hall and Oak, 2023).

The staking program is built on the Tally Protocol’s liquid staking infrastructure, a purpose-built tooling announced in June 2024 for DAOs seeking to tie staking rewards to active delegation rather than passive token holding. Arbitrum DAO approved a governance staking mechanism using the same Tally Protocol infrastructure in August 2024, though that system had not been deployed at the time of this study. RARI DAO’s June 2025 launch makes it the first operational implementation of this governance design among the three cases. The willingness to revisit and improve governance incentives across multiple iterations reflects the kind of institutional learning that Ostrom (1990) identified as central to sustainable commons governance. The DAO’s on-chain records document this learning process transparently, creating a public archive of governance evolution that other communities can draw on. From a theoretical perspective, RARI DAO illustrates a high degree of alignment between incentive design and governance participation, consistent with Ostrom’s (1990) emphasis on aligning individual incentives with collective outcomes. Its relatively rapid implementation of governance staking further reflects a governance structure optimized for operational agility, consistent with contingency theory.

RARI DAO demonstrates how relatively lean governance systems can rapidly experiment with governance participation incentives and staking-based coordination mechanisms. The integration of governance staking, delegate incentives, and public participation metrics reflects an approach focused on increasing governance engagement through aligned economic incentives. From an institutional perspective, the case illustrates how smaller governance systems may achieve greater implementation agility while still maintaining layered governance oversight through foundations and Security Councils, consistent with Ostrom’s (1990) emphasis on adaptive governance structures and contingency theory’s focus on organizational fit within operational environments (Donaldson, 2001).

Arbitrum DAO

Arbitrum DAO governs Arbitrum One and Arbitrum Nova, two of the most-used Ethereum Layer 2 networks, under a formal written constitution, with a treasury that held approximately $1.4 to $1.8 billion by the end of 2024, roughly 90% denominated in $ARB tokens (Arbitrum Foundation, 2023a). That scale defines every structural choice the DAO has made. Every treasury transaction, every protocol upgrade proposal, every delegate vote is publicly recorded and independently verifiable.

The governance structure has three distinct institutional layers. The Arbitrum Foundation, a Cayman Islands foundation company, serves as ecosystem steward — facilitating regulatory compliance, entering into legally binding commitments with third parties, and executing approved on-chain decisions (Arbitrum Foundation, 2023c). A separate entity, the Arbitrum OpCo Foundation, was subsequently established as the DAO’s dedicated operational layer, tasked with managing DAO-approved initiatives and hiring full-time staff to handle day-to-day execution, with the DAO earmarking 30 million ARB to fund it for two and a half years (Arbitrum Foundation, 2023e). The Security Council, twelve members divided into two rotating cohorts of six, provides emergency and routine upgrade capacity outside the standard governance pipeline (Arbitrum Foundation, 2023a).

Governance architecture

Arbitrum proposals run a structured multi-stage process. A new proposal begins as a forum post, discussed for at least a week. It then moves to a 7-day off-chain temperature check on Snapshot, requiring at least 500,000 delegated ARB tokens to submit. Moving to an on-chain proposal on Tally requires at least 1,000,000 delegated ARB tokens (Arbitrum Foundation, 2023d). After a successful temperature check, the proposal goes to a 14-day on-chain vote. Execution timelines depend on proposal type: non-constitutional proposals move through approximatelly 27-day implementation period; constitutional proposals typically require 37 days (Arbitrum Foundation, 2023c; 2023d). The quorum thresholds — 4.5% of votable tokens for constitutional proposals, 3% for non-constitutional -- set a minimum participation floor protecting against low-turnout governance capture.

In August 2024, the DAO approved a governance staking proposal with 91% support from over 25,000 on-chain participants (Bench, 2024). The proposal was introduced by Frisson, Chief Revenue Officer at Tally and an Arbitrum delegate, as the first implementation of the newly announced Tally Protocol. The proposal’s primary stated rationale was token utility and governance security: with less than 1% of ARB tokens actively used in on-chain governance and voter participation declining since the DAO’s launch, the proposal sought a mechanism to align token holder incentives with active governance participation. The approved design would introduce a liquid staked ARB token (stARB) and require token holders to delegate to active delegates — defined via a Karma Score combining on-chain voting, Snapshot voting, and forum activity — to earn future sequencer fee rewards. The August 2024 vote funded the implementation work, smart contract development, Tally integration, security audits, and working group formation but at the time of this study, the stARB staking mechanism had not been deployed and was not available to token holders (Bench, 2024). On delegate compensation, the DAO approved a Rewarding Active Delegates (RAD) program in late 2025 allocating approximately $1.5 million annually to eligible delegates holding at least 200,000 ARB in voting power (Arbitrum Foundation, 2025). Managed by the OpCo Foundation, the RAD program requires delegates to vote and publicly post rationale within 5 days. With 33 to 37 participants enrolled monthly, the program represents a sustained commitment to making governance participation professionally viable.

Treasury governance produced genuine institutional learning. AIP-1.1 and AIP-1.2 — the first establishing a smart-contract lockup schedule, spending limits, and transparency requirements for the Foundation’s Administrative Budget Wallet; the second amending governance documents and lowering the proposal submission threshold from five million ARB to one million ARB — emerged from an early governance dispute in which the original AIP-1 had been rejected by a large majority of token holders (Arbitrum Foundation, 2023b; L2Beat, 2023). Token holders exercised their power, the Foundation responded constructively, and the governance framework emerged stronger. The Short-Term Incentive Program further illustrates governance adaptability. When the original 50 million ARB allocation proved insufficient to fund all approved projects, the DAO authorized an additional 21.1 million ARB, bringing the total to 71.4 million ARB, through a second governance cycle (Arbitrum Foundation, 2023b; Lemma Ltd, 2023). Arbitrum DAO highlights the trade-off between scale and execution speed. While its governance design incorporates similar incentive structures, the delayed implementation of governance staking reflects the constraints of operating within a more formalized, constitutionally bound system, illustrating the role of institutional complexity in shaping governance outcomes.

Arbitrum DAO illustrates how governance complexity increases alongside treasury scale, institutional formalization, and ecosystem size. While the DAO adopted governance incentive structures comparable to those observed in RARI DAO, implementation timelines became significantly more extended due to constitutional governance requirements, multi-stage approval systems, and operational coordination constraints. The case highlights how institutional scale may improve procedural legitimacy while simultaneously reducing governance execution speed, reflecting broader tensions between governance formalization, coordination complexity, and organizational adaptability (Scott, 1995; Donaldson, 2001).

Optimism DAO

Optimism DAO, the Optimism Collective, governs the Optimism protocol and Superchain ecosystem, with a treasury of approximately $1.4 billion comparable in scale to Arbitrum’s (Normandi and Holloway, 2022). The Optimism Collective represents the most structurally ambitious governance experiment among the three cases. Where most DAOs make a single bet on token-weighted voting, Optimism made two simultaneous bets: that token-based governance and identity-based governance are necessary complements, and that the tension between them is a productive feature rather than a design flaw (Optimism Collective, 2023c).

Governance architecture

The Token House is the conventional half. OP token holders vote directly or through delegates on protocol upgrades, incentive mechanisms, and funding allocation (Optimism Collective, 2023b). The Citizens’ House is the experiment. Membership comes through non-transferable voting badges, soulbound NFTs, rather than through token ownership. Its primary function is governing Retroactive Public Goods Funding (RetroPGF): distributing OP tokens to projects that have already demonstrated impact (Optimism Foundation, 2023a). The Optimism Collective operates through three complementary institutional bodies. The Optimism Foundation, a Cayman Islands foundation company, serves as steward of the Collective — moderating governance processes, implementing approved proposals, entering into legally binding commitments with third parties, and developing governance frameworks such as the Working Constitution and Operating Manual (Optimism Foundation, 2023c). Uniquely among the three cases, the Foundation has articulated an explicit plan to progressively dissolve its stewardship role as the governance community matures, transitioning responsibilities to the Collective over time (Optimism Foundation, 2022). Protocol upgrades are enacted through the Optimism Security Council, a multisig requiring a signing threshold of 75% or greater from a minimum of eight independent elected members (Optimism Foundation, 2024). Together, the Foundation, Security Council, and bicameral governance system create a layered institutional architecture balancing operational agility with democratic legitimacy.

Governance operates on a seasonal calendar, making the process predictable (Optimism Collective, 2023a). For a non-Foundation proposal to proceed to a Token House vote, four of the top-100 delegates must give explicit approval on the discussion thread (Optimism Collective, 2023a). All votes require a 30% quorum of votable OP and a 51% approval threshold — a considerably higher participation floor than either RARI DAO or Arbitrum. Voting power is snapshotted at the moment a proposal is created, preventing last-minute manipulation. Optimism does not have a live native governance staking program at the time of this study. A community discussion about creating one, explicitly referencing Arbitrum’s approved proposal and the Tally Protocol, was initiated in October 2024 but had not resulted in a governance vote. Optimism has instead used airdrops as a delegator-incentive mechanism: Airdrop 3 directly rewarded users who delegated their OP to active, voting delegates. The RetroPGF rounds are where the Citizens’ House most visibly distinguishes itself from conventional DAO governance. In Round 2 (Q1 2023), 69 of 71 selected badgeholders allocated 10 million OP across 195 nominated projects. By Round 3 (Q4 2023), 30 million OP was distributed across 501 projects (Optimism Foundation, 2023b). The growth illustrates institutional scaling in action.

On delegate compensation, the Optimism Foundation has retroactively rewarded top active delegates every season since Season 1, compensating those who meet voting participation thresholds with OP tokens from the Foundation’s Ecosystem Fund (Optimism Foundation, 2022). Research analyzing over one million Optimism wallets found that these rewards produced a meaningful increase in token delegation, with effects particularly pronounced among smaller token holders (Hall and Oak, 2023). Optimism DAO represents a distinct governance experiment in legitimacy design, where identity-based governance complements token-based voting. This dual structure reflects a broader attempt to address limitations of purely token-weighted systems, aligning with emerging hybrid governance models in the literature.

Optimism DAO represents a distinct governance model that combines token-based governance with identity-based participation systems. The coexistence of the Token House and Citizens’ House reflects an attempt to balance economic stakeholder participation with broader legitimacy-oriented governance objectives. Compared to the other cases, Optimism demonstrates a more explicitly hybrid governance structure in which governance authority is distributed across multiple complementary governance bodies rather than concentrated solely within token-holder voting systems, aligning with emerging scholarship on hybrid blockchain governance systems (Esposito et al., 2025; Hassan and De Filippi, 2021). Although the three DAOs differ in scale, governance implementation, and institutional complexity, the comparative analysis reveals several recurring governance patterns alongside important structural differences. Table 1 summarizes the principal governance characteristics, participation mechanisms, and institutional arrangements across the three cases.

As summarized in Table 1, the three cases reveal both significant structural convergence and important differences in governance implementation. Taken together, the cases demonstrate a rapid, iterative, and increasingly sophisticated process of governance innovation, producing structural solutions, delegate incentive programs, staking-based participation rewards, bicameral legitimacy systems, constitutional frameworks, dedicated legal entities, and Security Councils that represent an emerging configuration of governance mechanisms, combining on-chain enforcement with community deliberation at a scale and transparency that traditional organizational forms have not achieved. The most analytically significant cross-case finding is the structural convergence on a three-body governance architecture. RARI DAO implements this through the RARI Foundation, the Security Council, and RARI governance. Arbitrum implements it through an operational layer consisting of the Arbitrum Foundation, and the OpCo, together with the Security Council, and ARB token governance. Optimism implements it through the Optimism Foundation, the Security Council, and the bicameral Token and Citizens’ Houses. Three organizations with very different origins, missions, and community cultures arrived at structurally similar institutional architectures. This convergence partly reflects industry-wide isomorphic pressures—the Cayman Islands foundation structure is a dominant legal template for crypto entities, and Security Councils gained prominence partly through external frameworks like L2Beat’s decentralization staging rubric. This convergence suggests that DAO governance systems may be evolving toward hybrid institutional structures rather than purely flat or fully decentralized governance arrangements. Rather than eliminating hierarchy entirely, these systems redistribute governance authority across interacting institutional layers combining token-holder participation, operational stewardship, delegated governance, and emergency oversight mechanisms. This finding aligns with emerging scholarship describing blockchain governance systems as hybrid organizational forms combining decentralized coordination with structured institutional governance (Esposito et al., 2025; Hassan and De Filippi, 2021). The findings also raise broader questions regarding what degree of institutional layering remains compatible with claims of decentralization. Across all three cases, governance authority is distributed among token holders, delegates, foundations, and Security Councils rather than residing exclusively within token-holder voting systems. While these arrangements preserve community participation and transparency, they also introduce formal governance structures that resemble elements of traditional organizational oversight. This suggests that mature DAOs may be better understood as hybrid governance systems that combine decentralized coordination with institutional safeguards designed to support operational continuity, security, and legal compliance.

The cross-case comparison of governance incentive mechanisms reveals convergence in the use of incentives as a core component of governance design, alongside divergence in how these mechanisms are structured and implemented. All three DAOs have developed systems to incentivize participation, including delegate compensation programs, delegation incentives, and, in some cases, staking-based mechanisms. These approaches reflect a shared recognition that governance participation requires active reinforcement rather than relying solely on intrinsic motivation. At the same time, the form and maturity of these mechanisms differ across cases. RARI DAO implemented a live incentive system combining delegation rewards with governance-linked staking. Arbitrum DAO introduced structured delegate compensation through the RAD program and approved a staking-based mechanism that had not yet been deployed at the time of this study. Optimism DAO implemented ongoing delegate reward programs and used airdrops to incentivize delegation, while discussions around additional mechanisms continued. These differences suggest that while DAOs are converging on the importance of incentivizing participation, they diverge in how these systems are operationalized and integrated into governance processes. Variation across cases reflects differences in governance structure, scale, and implementation pathways rather than fundamentally different design objectives.

Shared infrastructure also contributes to these patterns. The Tally Protocol, introduced in 2024, provides tooling to support governance-linked incentive mechanisms, enabling multiple DAOs to experiment with similar designs while adapting them to their own contexts. From an institutional perspective, this reflects convergence shaped both by common coordination challenges and by the adoption of shared technological infrastructure (Scott, 1995). Across all three cases, the underlying challenge remains consistent: participation in governance carries costs, while the benefits are often diffuse. Incentive mechanisms aim to address this imbalance by aligning individual participation with collective outcomes, a dynamic long recognized in collective action theory (Olson, 1965). Empirical work suggests that such incentives can increase delegation and participation, particularly among smaller token holders (Hall and Oak, 2023). More broadly, these findings illustrate how blockchain governance systems operationalize programmable institutional design through combinations of on-chain execution, governance incentives, delegated participation, and formalized oversight structures.

Placing these findings against Ostrom’s (1990) commons governance framework sharpens the picture considerably. The principles she identified — clear rules, collective choice arrangements, monitoring, and sanctioning mechanisms — map onto all three cases in recognisable ways: quorum thresholds define participation floors, Security Councils provide monitoring and emergency sanctioning, and delegate incentive programs align individual participation with collective outcomes. Scott's (1995) institutional theory offers a supplementary explanation for the structural convergence across cases: governance systems develop in response to pressures for regulative compliance and normative legitimacy, as Arbitrum’s constitutional elaboration after the AIP-1 dispute illustrates. Optimism’s bicameral model and its Foundation’s explicit plan for self-dissolution further reflect what Esposito et al. (2025) describe as a hybrid governance logic: market-oriented tokenholder governance coexisting with civic-oriented public goods funding.

Several limitations should be noted. This is a qualitative, cross-sectional study relying on publicly available data. Longitudinal analysis tracking governance adaptation over time would yield richer evidence about whether structural changes improve outcomes. Quantitative work on proposal throughput, delegate concentration indices, and treasury deployment efficiency could complement the structural analysis offered here. The legal and regulatory environment around DAOs is also evolving rapidly, a dimension that falls outside the scope of the current study but warrants dedicated future attention.

The three cases examined here, RARI DAO, Arbitrum DAO, and Optimism DAO, each represent different approaches to balancing speed with legitimacy, participation with efficiency, and formal structure with operational flexibility. All three continue to iterate on governance design through transparent, on-chain processes. The cross-case finding of structural convergence on a three-body architecture, foundation, Security Council, and token-holder governance, suggests that similar governance challenges, encountered in comparable technical and legal environments, tend to produce similar institutional solutions. At the same time, the cases reveal divergence in how governance participation is incentivized and implemented. All three DAOs have developed mechanisms to encourage active participation, including delegate compensation, delegation incentives, and other participation-linked rewards. However, these mechanisms vary in structure, maturity, and degree of integration into governance processes. This suggests that convergence in design principles can coexist with divergence in implementation pathways.

For researchers, these findings demonstrate the continued relevance of commons governance theory, institutional theory, and contingency theory in understanding blockchain-native organizational systems. For practitioners, the cases highlight the importance of governance architecture, participation incentives, and institutional adaptability in sustaining large-scale decentralized governance systems. Future research should examine the relationship between formal governance structures and governance practices in operation. While this study focuses on institutional design, governance records, and formal governance mechanisms, qualitative and longitudinal research could provide additional insight into how governance systems function in practice and how actual decision-making dynamics align with stated governance frameworks. As DAOs continue to evolve, governance design is likely to become an increasingly important determinant of institutional legitimacy, coordination capacity, and long-term organizational sustainability within blockchain ecosystems.