Key Insights:
- DAOs must move beyond token voting to reduce manipulation, decision fatigue, and long-term governance failures.
- Emerging tools should enhance, not replace, human judgment
AI and zero-knowledge systems work best when they support careful human-led coordination. - Scaling and governance must evolve together
Technical progress on rollups and composability must align with stronger organizational structures.
(DAOs) were initially envisioned as digital institutions that would be more effective than the traditional organizations due to the alignment of code-based coordination. This vision, however, is not much fulfilled since Ethereum co-founder Vitalik Buterin now claims that it was not achieved in the past few years.
In one of his posts posted Monday, he stated that the ecosystem requires a tremendous number of decentralized organizations. He emphasized, however, that they should be reengineered to work.
According to Butterin, the early development of Ethereum was highly influenced by the concepts of decentralized governance. These systems were to deal with common resources more fairly and transparently than current institutions. With time though, most of the implementations converged on simple treasury systems. The voting of the decisions shifted towards the token-holder voting; little experimentation beyond this system occurred.
https://x.com/VitalikButerin/status/2013145235447042067?s=20
As Buterin notes, this trend has been replicated several times with very little productive outcome. He maintained that token-weighted voting is simple to concentrate and inclined towards big owners. It also does not deal with more fundamental flaws of human politics and coordination. This leads to the governance process becoming performative instead of an effective one.
Why DAOs Must Evolve Beyond Voting Models
Buterin is of the opinion that core crypto infrastructure must be operated by stronger governance mechanisms to be reliable. He mentioned oracle networks, which are supportive of prediction markets and decentralized stablecoins. These systems require correct inputs, which cannot be achieved by economics. There is equal importance to social coordination and dispute resolution.
He cautioned that the oracle designs that involve tokens are most susceptible to manipulation. Even with technical protection, large stakeholders are able to exert impacts. This renders government to be a social issue, rather than merely an engineering problem. Lack of superior structures leaves major financial tools vulnerable to systemic risk.
He further commented on-chain dispute resolution through decentralized organizations as a necessity as well. Advanced smart contracts, such as insurance products, cannot exist without such mechanisms. This is unlike price feeds since disputes are often subjective and interpreted by context. This complicates their solution by mere automated systems.
Vitalik Outlines Governance, Privacy, And Decision Tools
In addition to the disagreements, Buterin also emphasized the necessity of a trusted coordination based on mutual standards. These contain lists of token addresses, canonical interfaces and verified applications. The preservation of such references enables the developers to work faster and with more confidence. It also assists the users to shun fraud or risky projects.
Another area that he insisted on was long-term project maintenance. Supportive financing enables new donors to come in and enhance pre-existing systems. It also provides the ability of communities to survive following the withdrawal of original teams. Unless continuity is applied, most of the promising projects tend to fade away with time.
Buterin has also addressed the topic of group decision-making in his more general work. His approach to the tradeoffs of governance is a convex versus concave one. There are issues, which are best suited to a large number of independent signals. There are those who need hard limits so that the negative consequences of drastic decisions are avoided.
Participation is also associated with privacy. Buterin has suggested that the problem of decision fatigue is caused by continuous voting by the population. When all activities are turned into a social performance, participation will sooner or later reduce. Long-term involvement can be enhanced by the use of pressure that is decreased through private processes.
Layer Two Scaling And Synchronous Composability Advances
In the future, Buterin anticipates the introduction of new technologies that can allow more capable systems of governance. He has brought out artificial intelligence, zero-knowledge proofs, and improved communication tools. Nevertheless, he warned not to entrust complete authority to self-directed models. Rather, technology is supposed to enhance human judgment and not substitute it.
His emphasis was on the fact that communication design should be given much more attention than it is today. It, according to him, is about half of the work of establishing successful coordination. Ineffective communication tools restrict participation, in spite of its sound technical systems. Making this layer meaningful would open the door to improvement.
Buterin also made another update, which talked about the Ethereum scaling roadmap. He reported native rollup precompiles and layer one integration of zero-knowledge. The changes solve historical problems of delayed withdrawal behavior and disjointed composability. They also make the needs of governance closer to technical execution.
He stressed the significance of synchronous composability between layer-two networks. Confirmations with low latency should be in cooperation with standardized virtual machine parts. This balance permits the use of specialized features without interoperability being violated. This alignment, he said, is the key to Ethereum becoming resilient in the long term.
In his speech, Buterin has revisited the same fundamental theme a few times. DAOs are still required, yet their present manifestations are not as good as they can be. They will only be able to satisfy future requirements by reconsidering their governance, privacy, and coordination.
