eGov-DAO: a Better Government using Blockchain

based Decentralized Autonomous Organization

Nour Diallo, Weidong Shi, Lei Xu, Zhimin Gao, Lin Chen, Yang Lu, Nolan Shah, Larry Carranco,
Ton-Chanh Le, Abraham Bez Surez, Glenn Turner
Computer Science Department
University of Houston
Houston, Texas, USA
[email protected], [email protected], [email protected], [email protected], [email protected],
[email protected], [email protected], [email protected], [email protected],
[email protected], [email protected]

Abstract—E-government system has greatly improved the ef- highly centralized IT infrastructure, which is more vulnerable
ficiency and transparency of daily operations of a government. to outside attacks. In addition, the system is heavily con-
However, most of existing e-government services are provided in trolled by human individuals, which makes it error-prone and
a centralized manner and heavily rely on human individuals to
control. The highly centralized IT infrastructure is more vulner- leaves room for corruption. For example, inside rogue users
able to outside attacks. Also, it is relatively easy to compromise can easily compromise the data integrity of the system. In
the data integrity by inside rogue users. Furthermore, relying this paper, we address these challenges of the e-government
on individuals to monitor and control some of the working flows system by leveraging the emerging decentralized blockchain
makes the system error-prone and leaves room for corruption. technology [1] to bring security, immutability, reliability, and
To address these challenges, we propose to use the blockchain
technology and decentralized autonomous organization (DAO) to transparency to the system. While the blockchain technology
improve the e-government system. The blockchain-based DAO can be applied to a wide range of government services,
system works in a fully decentralized way and is immune to this paper focuses on utilizing a blockchain feature called
both outside and inside attacks. At the same time, operations Distributed Autonomous Organization (DAO) for a concrete
of such system is only controlled by pre-defined rules; thus, the use case of the government contracting service [2].
uncertainty and errors caused by human processes are greatly
reduced. We provide a concrete use case to demonstrate the usage Government contracting is a service that allocates public
of DAO e-government and evaluate its effectiveness. contracts to given vendors. The allocation process is inefficient
Index Terms—blockchain, DAO, e-government, transparency, since it requires multiple inter-agency interaction and involves
auditability many human labors [3]. In order to provide a simple and
I. I NTRODUCTION convenient interface, the government allocates both human and
financial resources, but it results in a minimal transparency
Nowadays, most countries in the world have been providing in governance. In this scenario, blockchain technology would
e-services, in which the governmental public services are increase transparency and trust, reduce costs, and simplify the
implemented by information and communication technologies, process.
to serve its citizens better. Initially, developing an e-service
may be challenging, due to the complexity of government The blockchain framework introduced in this paper is generic
policies or the disinterest of its citizens in new technologies. and can be apply to any policy for government contracting. In
However, there are still opportunities to attract more interest this paper, we consider the policy of the U.S. Small Business
and collaboration for the e-governance by providing a secure, Administration as a case study [4]. First, we describe the
rigorous, autonomous, and transparent digital system for its general application of blockchain for the U.S contracting and
services. Such system e.g voting registration, driver licence introduce several regulations of allocating contracts required
processing, usually improves the government’s productivity by the U.S. Small Business Administration policies. Next,
and efficiency on collecting, securing, and sharing information. we implement a DAO framework which summarizes these
Therefore, it will be more likely to be received by the requirements to regulate the allocation process. Moreover, the
citizens because of its speed and transparency. For instance, framework also defines the parties of the system and their
the digitalization of government’s services helps to replace activities, and models the main process of contract selection
costly in-person or postal communication by the use of mobile following the policies. Finally, we provide a set of enforcement
phones and emails. rules to validate the process.
However, despite numerous efforts in improving the gov- The remainder of the paper is organized as follows: In
ernment system e.g voting system, it is still not sufficiently Section II we briefly introduce the background technology
secure and transparent. The system is usually built on a including blockchain, smart contract, and DAO. Section III
978-1-5386-2521-7/18/$31.00 © 2018 IEEE describes the detailed design of the government DAO archi-

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tecture. In Section IV we analyze and evaluate the proposed an organization [9]. Like an organization, a DAO behaves with
solution. We conclude the paper in Section V. objectives and expectations to achieve a set of goals. In theory,
a DAO can be set for any reasons or goals [10].
II. BACKGROUND Usually, a traditional organization is owned by an individ-
In this section, we briefly review the background of ual or stakeholders and registered in a centralized system,
blockchain technologies. e.g. government. This type of organization is managed in a
hierarchical structures. Directors in the organization decide
A. Blockchain and Smart Contract
the future actions and the remaining members just follow the
A blockchain, or a distributed ledger, is a system involving decision. For example, in a company, the board has the power
multiple participants who achieve consensus over a data set to decide how to deal with the funds and to set a goal; other
and maintain the data locally. Blockchain systems are devel- employees will be assigned with tasks to complete the goal.
oped under different trust models with different consensus In contrast, all participants in a DAO have the same rights to
protocols, e.g., proof-of-work [5] and proof-of-stake [6]. A make decisions. It means that no one has special privileges in
permissioned block chain usually has an identity manage- operating the organization.
ment mechanism to control who can participate the block Autonomy is the major feature of DAO. A DAO requires
construction. Authorized users can run different Byzantine an automated program to ensure that the decisions can be
fault tolerant protocol to determine whether a block should executed without any manual intervention [11]. For a smart
be accepted and added to the block chain. In this paper, we contract, if a set of events in the contract is triggered, it
only consider public block chain constructed using proof-of- will be executed automatically by the decentralized system.
work as it has received intensive studies. For instance, if a contractor receives enough votes from the
The idea of a smart contract was first introduced by Szabo members of DAO, funds will be released for him or her.
[7], which is described in Definition 1. Typically, DAO also involves the following features:
Definition 1: A smart contract is a set of promises, specified • DAO comprises all data/requirements (resources) needed
in a digital form, including protocols within which the parties to complete a task/process.
perform on these promises [8]. • DAO can enforce partnerships between compa-
Block chain provides an ideal platform for smart contracts nies/organizations without any physical interaction
to be executed in a decentralized way. Roughly speaking, a because a smart contract runs automatically on nodes in
smart contract is a piece of program that consists of a set of the network and does not require any human interaction.
rules and corresponding operations of related accounts. On a • DAO can be set up as easy as creating a company. It is a
high level, the life cycle of a smart contract in a public block global organization open to anyone, regulated by a smart
chain system can be summarized as follows: contract and operated using computer codes/coding.
1) Creation. Users involved in the contract work together • DAO will transform organizational processes and create
to build a smart contract and use digital signatures to a new platform (distributed system) that impacts our
guarantee its authenticity. The smart contract is then societies.
submitted to the system.
2) Acceptance. Users who have received the smart contract III. B LOCKCHAIN BASED G OVERNMENT DAO
first check its validity and then do mining to include it
In this section, we adopt smart contracts and DAO to
in a new block. The new block is then broadcast to the
build an automated blockchain based e-government system,
block chain.
or government-DAO (eGov-DAO) for short. We first describe
3) Execution. Users in the system who have accepted a
the high level architecture of the government-DAO and then
new block containing the smart contract will execute
provide its detailed design.
it locally according to its instructions, and obtain the
result. Users then do mining to build a new block to A. High Level Architecture
hold the result and broadcast it to the system.
4) Result confirmation. Users who have received a block Participants of the eGov-DAO is divided into two groups,
containing the result of the smart contract will verify its the DAO maintainer and the users, as depicted in Fig. 1.
correctness to determine whether to accept it. In most • Blockchain maintainer. As we consider public blockchain
cases, the verification is done by re-computing the smart constructed using proof-of-work, any one with com-
contract and comparing the result with the one that is putation/storage resources can connect to the system
received. and contribute to block construction [12]. Some of the
blockchain maintainers may not be honest, e.g., they
B. Decentralized Autonomous Organization could try to alter or remove transaction data stored in
The concept of blockchain based smart contract can be fur- the blockchain system or provide wrong results of a
ther extended to Distributed Autonomous Organization (DAO). smart contract. However, we assume that the majority of
A DAO functions with a set computer programs, in this case them are honest maintainers so that those malicious ones
smart contracts, which define in advance the rules governing cannot compromise the blockchain infrastructure;

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 a new contract

Government Agencies Preparing Submitting

Identity Management
contract issuer's signature
Convert to smart Check
contracts consistency

issuer's cancelation
Auditor Bidder

no satisfied constractor
Auditing Bidding keep bidding until selected
Blockchain Maintainers
execution result

contractor's signature

Executing

Transport Company Material Supplier

Fig. 1. Two types of participants in the eGov-DAO system: the blockchain Fig. 3. The life cycle of a government-DAO. Usually, an eGov-DAO requires
maintainers and users including government agencies, auditors, and other contract issuers, regulators, contractors, executors, and auditors to participate
vendors that work for the government. The identity management component in.
supports identity control and does not participate in daily operations of the
eGov-DAO.
acquire a government contract. The steps can be grouped into
Auditing four categories: contract preparation and submission, bidding
and selection, contract execution monitoring, and auditing. At
Contract Bidding and Execution Execution Execution each stages of the execution, the system checks and validates
Submission Selection 1 2 3
that all the parties meet the requirements before moving to the
next stage of the execution.
The eGov-DAO automatically executes all the transactions
and the results are available to the public including all users.
The system first verifies that contract preparation is submitted,
validates and adds it to the blockchain, then moves to the bid-
Blockchain Maintainers ding step. Fig. 3 demonstrates the life cycle of a government
contract in the eGov-DAO system.
Fig. 2. An overview of the work flow of the government-DAO.
User registration. Unlike the blockchain maintainer, to be-
come a user of the eGov-DAO, an entity has to go through
• User: The eGov-DAO has a variety of users, from a registration procedure before he/she can participate in. For
government agencies who manage government projects, example, a D-U-N-S Number, like the social security number
project auditors, to all types of vendors. They can submit for a company, provides a unique form of identification and
different types of transaction records to the eGov-DAO, records all the information about the company [13]. This
which will be verified by blockchain maintainers before number can help others like lender and business partner to have
accepted to be included in the blockchain. According to an idea about the company. When the entity registers, it has
the rules defined in the eGov-DAO, an authority party to provide such information to an authority and the authority
may need to approve one transaction before it can be will issue a certificate to it as its identity in the eGov-DAO.
accepted. In most cases, the certificate is a public/private key pair where
the public key is embedded in a digital certificate [14], [15].
Fig. 2 gives an overview on the work flow of the proposed
The rules to use and manage the certificate are also embedded
government-DAO. For a government contract, the eGov-DAO
in a smart contract, and no human needs to be involved.
tracks each step of it during its whole life cycle.
Contract preparation and submission. A traditional govern-
B. Detailed Design ment contract needs to be converted to the form of a smart
There are various forms of government contracts. For ex- contract, i.e., all clauses in the contract need to be written in
ample, fixed price where vendor can compete and go through the language supported by the eGov-DAO [16]. Algorithm 1
a bidding system, and cost reimbursement in which the price gives an example of an eGov-DAO contract. After generation
is negotiable. All of them can be implemented using the DAO of the contract, the contract issuer digitally signs the contract
concept. Initially, the general requirements of the contract are and shares it with other regulators. Each regulator or actor
implemented in smart contract, which will be used as the basic checks whether the contract is consistent with related rules
rules to control execution of the contract. and generates a digital signature using his/her private key.
All users, e.g., vendor, company, and regulators, are gov- After all these procedures are finished, the contract and related
erned under these initial requirements. According to the US signatures are sent to the eGov-DAO and available to the
Department of Defense, there are at least eleven steps to public.

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 Note that contract contents include both detailed require- Algorithm 1 A smart contract manages bidding in the
ments/description of the project and contractor selection cri- government-DAO.
teria. The contract also includes a set of milestones where the 1: Input:
contractor should submit information to the eGov-DAO. All 2: chairperson:address address of chairperson
the information is encoded into corresponding smart contracts. 3: voters:array list of voters
4: proposals:array list of proposals
Bidding and selection. After the contract is confirmed on the
5:
blockchain of the eGov-DAO, the bidding procedure starts.
Fig. 4 shows a sequential diagram of this procedure. More 6: function VOTE(proposal i, voter a)
specifically, all contractors who are interested can prepare a 7: if voter a.voted then return false
proposal, generate a signature of the proposal, and submit 8: if proposal i proposals.length then return false
to the eGov-DAO. Each submitted bidding will be checked 9: voter a.voted true
by participants of the eGov-DAO, and only those that satisfy 10: voter a.vote proposal i
the pre-defined criteria will be accepted and recorded in the 11: proposals[proposal i].voteCount
blockchain. Then participants run the procedure embedded voter a.weight return true
in the smart contract to select the winning contractor [17]. 12:
Information of the selected contractor is also embedded in 13: function WINNING P ROPOSAL
a block and stored on the blockchain. When this block is 14: win c 0
confirmed, the selected contractor should follow the require- 15: for prop 0,prop < proposals.length,prop++ do
ments/description of the project. 16: if proposals[prop].voteCount > win c then
Note that the bidding information usually needs to be kept 17: win c proposals[prop].voteCount
in secret before the selection procedure. As the blockchain 18: winningP roposal prop
is publicly available, a protection mechanism is required. A return winningP roposal
cryptographic commitment scheme can be used to address this 19:
problem. The scheme allows one to commit a chosen statement 20: Comments:
while keeping it hidden from others, with the ability to reveal 21: The goal of function “winningProposal” is to find out a
the committed statement later [18]. For the eGov-DAO, each proposal which receives maximum votes.
contractor puts his/her bidding information into a commitment
and submits to the blockchain, which prevents others from
learning the bidding. At the selection step, each contractor can IV. A NALYSIS AND E VALUATION
open his/her commitment and the binding property prevents In this section, we analyze and evaluate the proposed
one from modifying the committed statement. government-DAO from security and performance perspectives.
Algorithm 1 provides an example pseudo code for the smart
contract to manage bidding procedure. A. Security of the Government-DAO
Monitoring contract execution. When the selected contractor There two major types of threats to the government-DAO
meets one milestone defined in the contractor, he/she submits system (eGov-DAO):
required information of the milestone to the eGov-DAO. A • Data integrity. Data is the foundation for all functions
third party such as the project supervisor can also provide provided by the eGov-DAO. If an attacker can alter/delete
information for the milestone. Participants of the eGov-DAO existing data or insert new data to the historical data, it
checks whether submitted information meets the requirements may cause serious consequences. The blockchain struc-
defined in the contract to determine if the contractor can ture can avoid all these risks to protect the integrity
proceed to the next step. The decision is also recorded in a of the data. In order to compromise data stored in the
block and appended to the blockchain [19]. blockchain, an attacker has to compete with all the honest
From Fig. 5, we learn that smart contracts are executed by users who maintain the blockchain system on producing
the available nodes in the network, and the execution result new blocks. It is a big challenge for both proof-of-work
will be submitted to the blockchain for others to verify. Once and proof-of-stake, and the probability of success is very
the system reaches consensus on the result, it will be added low [6], [20].
to the blockchain of which existing participants preserve a • Rule integrity. In the eGov-DAO system, rules are logics
complete copy. embedded in smart contracts. Rule integrity means that
Auditing. Because of the immutability property of blockchain, an attacker cannot influence the execution of a smart
the eGov-DAO provides a good support for auditing. All contract to get preferred results. Rules (smart contracts)
contract related information, e.g., project requirements, re- are embedded in blocks before they are executed so
ceived bidding information, and contract execution/inspection the attacker cannot modify them directly. According to
records, is stored on the blockchain and difficult to modify. An the smart contract execution model, everyone will run a
auditor can easily trace back each step to see whether there is contract to see the results rather than simply accepting
a violation. one. Therefore, as long as the majority of users of the

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 BLOCKCHAIN
CONTRACTOR EVENT DAO
REQUEST

requestSigature()

idRequest=
authenticate()

[sendRequest]

bid(signature,proposal)

checkCriteria(bid,contractor)

[satisfied]
win()
new
Email Alert

[available] new
Event

Fig. 4. Multiple contractors start to bid for the contract and the selected one will be notified by DAO and blockchain.

a data protection key and encrypt everything before submiting

Node1 Node2 to the eGov-DAO. This mechanism can protect the data from
Trigger &
execution unauthorized accesses but also reduces the transparency of the
result result government. Therefore, data that needs to be protected should
be defined in the eGov-DAO in advance to make sure that this
function will not be abused.
Node1 Node2
B. Performance of the Government-DAO
Modern governments are becoming increasingly complex
Consensus and the eGov-DAO has to handle a large amount of workload.
result A good thing is that most of these works do not have a high
Blockchain Blockchain
requirement on latency. For example, in the process of bidding
and selection, a latency in several days is still acceptable to
have the final result. The performance of the eGov-DAO is
Fig. 5. Smart contract execution can be triggered by an event internally or heavily affected by the underlying blockchain infrastructure,
externally; the execution of a contract would produce a result on which all and various methods have been developed to improve its
participants agree. throughput, latency, and scalability [5], [21], [22]. All these
techniques can be applied to improve the performance of the
eGov-DAO so that it will have the capability to process an
system are honest, an attacker cannot compromise the increasing amount of work.
rule integrity by providing a wrong execution result as it
will be rejected by the majority. V. C ONCLUSION
Another potential security concern is data confidentiality Today, e-government services, e.g., the contracting service,
stored on the blockchain that the eGov-DAO relies on. Because do not have a fully automated and efficient system that can
we are using public blockchain, everyone can access data both integrate all the participants and provide transparency.
stored there. In most cases this is not a problem because the In this paper, we propose the blockchain-based government-
government has to make such information public eventually. DAO (eGov-DAO), which is the first system allowing real-
In case the data is sensitive, all parties involved can negotiate time monitoring and analysis of an e-government service. The

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