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21 August 2024
Supported by DIREC, the experienced management consultant Henrik Axelsen is exploring how the corporate structure known as DAO (Decentralized Autonomous Organizations) can be implemented in modern businesses. The potential is enormous, but the challenges are equally substantial.
Imagine working in a company where all your colleagues operate under pseudonyms and could be located anywhere in the world. You do not necessarily know who you are collaborating with, and everyone has the opportunity to vote on the company’s direction. Major decisions are encoded in “smart contracts,” stored on the company’s blockchain for complete transparency.
This corporate structure is called a DAO (Decentralized Autonomous Organization). A concept that combines blockchain technology and management practices in a way that fascinates researchers worldwide, including Henrik Axelsen, a PhD student at the University of Copenhagen and former partner at the auditing firms EY, PWC, and Marsh & McLennan.
Sources: Investopedia and Coinbase
“DAO is the cooperative movement on steroids. It’s a completely new approach to governance and community,” says the former consultant, who also has a background in law.
He recently submitted his PhD project on the topic as part of the DIREC-supported initiative “AI & Blockchain for Complex Business Processes.”
For Henrik Axelsen, a DAO represents not just a technological breakthrough but a fundamental shift in how we understand organizations and financial infrastructure. An infrastructure he has helped maintain throughout his many years as a consultant for some of Denmark’s largest companies.
According to Axelsen, most companies will not be able to operate as a DAO due to the potential for chaos. However, the principles behind DAOs, decentralization, a flat hierarchy, and high security, have the potential to revolutionize various sectors, especially finance.
“Decentralizing the financial world can make the system much more accessible. The financial world is extremely costly and inefficient. Just the compliance costs for banks amount to €30 billion a year. What is the socio-economic benefit of that?” he asks rhetorically.
He believes the traditional financial sector is facing a significant transformation, but addressing these challenges requires action at the political level.
“I think politicians will be compelled to consider how technology can make the financial sector more efficient and automated. This could save society a lot of money while preventing the control failures we still witness today,” he says.
Henrik Axelsen also believes that the principles behind DAOs could prove beneficial in developing financial infrastructure in countries, where traditional banking is too expensive. Additionally, they could be useful in creating sustainable supply chains, where every product must be traceable down to the smallest detail.
“It’s incredible what this technology can achieve. It has the potential to create a better world, reaching places where the traditional system currently cannot,” he says.
Beyond his academic research, Henrik Axelsen is also involved in the practical application of blockchain technology as a co-founder of PixelPai, a company aiming to be the ‘gateway’ to the next generation of the financial internet.
“We believe that in ten years, there will be digital universes people will seamlessly move in and out of. We are working on a decentralized solution that integrates the financial world into these digital universes,” he says.
The knowledge he has acquired over the past three years as a PhD student will benefit both his company — and the industry as a whole. He emphasizes that further research into blockchain and DAOs is essential for the future development of this field.
“DIREC was very insightful in recognizing the need for more research in this area. It took me three years to fully grasp the subject, and hopefully, my research will pave the way for even more knowledge in the field.”
Henrik Axelsen’s PhD dissertation on DAOs will be available in October 2024.
Learn more about the project here.
