Decentralized Autonomous Organizations (DAOs) are blockchain-based organizations that facilitate decentralized governance. Today, DAOs not only hold billions of dollars in their treasury but also govern many of the most popular Decentralized Finance (DeFi) protocols. This paper systematically analyses security threats to DAOs, focusing on the types of attacks they face. We study attacks on DAOs that took place in the past, attacks that have been theorized to be possible, and potential attacks that were uncovered and prevented in audits. For each of these (potential) attacks, we describe and categorize the attack vectors utilized into four categories. This reveals that while many attacks on DAOs take advantage of the less tangible and more complex human nature involved in governance, audits tend to focus on code and protocol vulnerabilities. Thus, additionally, the paper examines empirical data on DAO vulnerabilities, outlines risk factors contributing to these attacks, and suggests mitigation strategies to safeguard against such vulnerabilities.

We empirically study the state of three prominent DAO governance systems on the Ethereum blockchain: Compound, Uniswap and ENS. In particular, we examine how the voting power is distributed in these systems. Using a comprehensive dataset of all governance token holders, delegates, proposals and votes, we analyze who holds the voting power and how this power is being used to influence governance decisions. While we reveal that the majority of voting power is concentrated in the hands of a small number of addresses, we rarely observe these powerful entities overturning a vote by choosing a different outcome than that of the overall community and less influential voters.

Combinatorial auctions (CAs) offer the flexibility for bidders to articulate complex preferences when competing for multiple assets. However, the behavior of bidders under different payment rules is often unclear. Our research explores the relationship between core constraints and several core-selecting payment rules. Specifically, we examine the natural and desirable property of payment rules of being non-decreasing, which ensures that bidding higher does not lead to lower payments. Earlier studies revealed that the VCG-nearest payment method – a commonly employed payment rule – fails to adhere to this principle even for single-minded CAs. We establish that when a single effective core constraint exists, the payment maintains the non-decreasing property in single-minded CAs. To identify auctions where such a constraint is present, we introduce a novel framework using conflict graphs to represent single-minded CAs and establish sufficient conditions for the existence of single effective core constraints. We proceed with an analysis of the implications on bidder behavior, demonstrating that there is no overbidding in any Nash equilibrium when considering non-decreasing core-selecting payment rules. Our study concludes by establishing the non-decreasing nature of two additional payment rules, namely the proxy and proportional payment rules, for single-minded CAs.

We consider an automated market maker (AMM) in which all trades are batched and executed at a price equal to the marginal price (i.e., the price of an arbitrarily small trade) after the batch trades. We show that such an AMM is a function maximizing AMM (or FM-AMM): for given prices, it trades to reach the highest possible value of a given function. Competition between arbitrageurs guarantees that an FM-AMM always trades at a fair, equilibrium price, and arbitrage profits (also known as LVR) are eliminated. Sandwich attacks are also eliminated because all trades occur at the exogenously-determined equilibrium price. Finally, we show that our results are robust to the case where the batch has exclusive access to the FM-AMM, but can also trade on a traditional constant function AMM.

This paper studies the question whether automated market maker protocols such as Uniswap can sustainably retain a portion of their trading fees for the protocol. We approach the problem by modelling how to optimally choose a pool's take rate, i.e the fraction of fee revenue that remains with the protocol, in order to maximize the protocol's revenue. The model suggest that if AMMs have a portion of loyal trade volume, they can sustainably set a non-zero take rate, even without losing liquidity to competitors with a zero take rate. Furthermore, we determine the optimal take rate depending on a number of model parameters including how much loyal trade volume pools have and how high the competitors' take rates are.