**4.2 Rigidity**

While DAOs promise to be decentralized, transparent and auditable, such values come at the cost of rigidity. Usually, the protocol and the smart contracts are developed by a creator or a team that launch the project. From the moment that the DAO is active and the governance tokens are distributed across members, the future of the DAO is in the community hands. However, any changes proposed will require a series of activities that encompass a proposal process (that can involve several rounds and checks), voting mechanisms and subsequent implementation. Such a process is time-consuming, which can compromises the project ability to change, adapt or innovate, limiting its growth. Additionally, changing and amending smart contracts increase the likelihood of errors and bugs; therefore, DAOs face a trade-off between flexibility and security [13].

### **4.3 Voting misbehaviours**

The majority of DAOs base their voting rights on governance token that represents ownership, resembling companies' shares. Depending on the voting system adopted by the DAO, it can promote or mitigate power concentration, bribery and collusive behaviors. Some DAOs have employed methods to avoid voting misbehaviours, such as defining shorter/longer periods for voting, limiting/increasing the number of tokens available, controlling voting power, establishing voting thresholds to approve proposals, communicating with all the participants and proposing consensus adaptations. Moreover, the unbalanced power voting can be produced by the technical knowledge required in some decisions giving more opportunities for deciding to developers [13]. Despite all mechanisms employed to avoid voting power asymmetries, it is impossible for DAOs to guarantee that decision-making is not affected by voting misbehaviours [11].

### **4.4 Lack of legal status**

Since DAOs are borderless, it is difficult to define what type of organization they are [2, 3], which codes or regulations their member should follow [14] and which

regulations for taxation and management they obey to. Owing to the lack of regulations, it is difficult to determine who will be responsible for liabilities, damage or failures. The absence of a legal framework can promote malicious acts and attacks. Even if the approval relies on voters, there are no clear rules or consequences that protect the ownership and the community from damage.
