Decentralised Autonomous Organisations for Public Procurement

Abstract

Blockchain has been recognised as a technological breakthrough with the ability to support new decentralised security-based solutions in sectors such as information technology and finance. Blockchain allows different communities to create Decentralised Autonomous Organisations (DAOs), which are self-organised democratic organisations controlled by smart contracts. This paper presents a new DAO model for the procurement of services by public organisations, such as government agencies. To demonstrate the advantages of this solution, this work looks specifically at current public procurement systems that resort to third-party contractors that manage these negotiations. Third parties lack the transparency, security, and democratic representation that a DAO can provide. We present the implementation of a DAO as a set of smart contracts executed on Ethereum-compatible permissionless blockchains, supported by a consensus algorithm, replacing third-party contractors.