While DAOs were supposed to embody the promise of decentralized governance, Vitalik Buterin today draws a harsh observation: their current model is running out of steam. In a widely relayed post, the co-founder of Ethereum denounces rigid structures, dominated by large carriers and incapable of responding to complex coordination issues. His call for a new design marks a pivotal moment for DAOs, which he invites to move beyond simple voting logic to become real on-chain infrastructures.
In brief
- Vitalik Buterin denounces the current DAO model, which he considers rigid, too dependent on tokenized votes and vulnerable to centralization.
- He points to a loss of vision: DAOs no longer fulfill their initial role of efficient and equitable decentralized coordination.
- Several systemic flaws are identified, including voter fatigue, the absence of correction mechanisms and inflexible governance.
- It offers concrete tools such as confidential voting, advanced cryptography and artificial intelligence to streamline processes.
Decentralized governance running out of steam
In a message published on January 19, Vitalik Buterin was particularly critical of the evolution of DAOs, denouncing a model that, according to him, had become “rigid, excessively tokenized and vulnerable to the perverse effects of large carriers”while a controversial vote agitated the Aave protocol community.
In his view, the initial promise of decentralized coordination has been hijacked by a near-exclusive focus on token-based voting, at the expense of building resilient institutions. “Many DAOs today are treasuries managed by snapshot and some multisigs”he writes, pointing out a loss of substance in the face of the original ambitions.
To illustrate this drift, Buterin highlights several systemic flawsobserved in many emblematic DAOs:
- Limited participation in decision-making processes, marked by increasing voter weariness and de facto centralization;
- The capture of power by large token holders, generating conflicts of interest and a democratic imbalance;
- The absence of robust correction mechanisms, preventing DAOs from adjusting in the event of an error or crisis;
- Excessive dependence on a fixed vision of governance, reduced to a series of votes without context or long-term strategy.
This harsh diagnosis comes with a warning. Without structural transformation, DAOs risk losing their relevance and their capacity to embody a real alternative to centralized models.
Rethinking DAOs as Infrastructure Systems
To get out of this impasse, Vitalik Buterin puts forward several proposals which contrast sharply with the dominant model. He advocates for DAOs that move away from purely financial logic, in order to play a role of technical infrastructure within the ecosystem.
According to him, these organizations should focus on functions such as oracles, on-chain dispute management, or the coordination of time-limited projects. “We need more DAOs, but different and better DAOs”he summarizes on X.
Among the avenues put forward, Buterin underlines the importance of confidentiality technologies for reforming governance: encrypted votes, zero-knowledge proofs, or even secure multiparty calculation.
He also mentions the use of artificial intelligence, not to replace human decisions, but to reduce the complexity of internal processes. By introducing “lens of governance” adapted to the decision-making context, it offers modular governance, capable of adapting to the nature of the decisions (technical or political, urgent or concerted).
These proposals do not only aim to improve the technical efficiency of DAOs. They reflect a conceptual shift towards structures capable of surviving their creators, and of assuming key roles in DeFi, insurance, or the management of decentralized identities. If they resonate with developers and founders, these ideas could inspire a new generation of DAOs, better equipped to respond to the political, economic and social challenges that lie ahead in Web3.
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