How Does the “Common Enterprise” Prong of the Howey Test Apply to a Decentralized Autonomous Organization (DAO)?

The "common enterprise" prong assesses whether the fortunes of the investor are interwoven with those of the promoter or other investors. For a DAO, the argument against it being a common enterprise rests on its high degree of decentralization.

If the success of the token relies on the continuous, centralized efforts of a core team, the prong is met. If the token's value is purely derived from the autonomous code and the community's independent governance, the argument is that there is no centralized common enterprise.