The seconomics (security-economics) vulnerabilities of Decentralized Autonomous Organizations

Abstract

Traditionally, security and economics functionalities in IT financial services and protocols (FinTech) have been perceived as separate objectives. We argue that keeping them separate is a bad idea for FinTech “Decentralized Autonomous Organizations” (DAOs). In fact, security and economics are one for DAOs: we show that the failure of a security property, e.g. anonymity, can destroy a DAOs because economic attacks can be tailgated to security attacks. This is illustrated by the examples of “TheDAO” (built on the Ethereum platform) and the DAOed version of a Futures Exchange. We claim that security and economics vulnerabilities, which we named seconomics vulnerabilities, are indeed new “beasts” to be reckoned with.