Ethereum co-founder Vitalik Buterin has called for new decentralized autonomous organizations (DAOs) designs, arguing that the sector needs more than token-voting treasuries if it wants to improve on traditional corporate and political structures.
In a Monday X post, Buterin said that current DAOs often amount to “a treasury controlled by token holder voting.”
That model is widely copied but it is “inefficient, vulnerable to capture and fails utterly at the goal of mitigating the weaknesses of human politics,” he said.
Buterin argued that DAOs should solve specific infrastructure problems, starting with better oracles, onchain dispute resolution and long‑term project stewardship.
He also highlighted the need for DAOs for subjective disputes (such as insurance outcomes), maintain shared lists like anti‑scam registries and standard formats to spin up short‑lived funding vehicles and keep projects alive after core teams disappear.
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Concave vs. convex: different DAOs for different problems
Buterin framed his thinking using his earlier “convex vs concave” governance lens. For “concave” problems, where compromise is “better than a coin flip,” DAOs should maximize robustness by aggregating input from many sources.
For “convex” problems that require decisive bets, he said it was more appropriate to allow strong leadership and treat decentralization to hold leaders to account, rather than a full replacement.
To make such systems work in practice, DAOs must solve privacy issues and “decision fatigue,” Buterin said.
Without privacy, governance becomes a “social game,” and if participants are asked to vote constantly, engagement falls off after an initial burst of enthusiasm. He pointed to zero‑knowledge proofs and, in some cases, secure multi‑party computation and fully homomorphic encryption to secure privacy.
He also suggested that artificial intelligence could help reduce decision fatigue by supporting analysis or allowing users to delegate voting to locally controlled models, while cautioning against DAOs being run by AI.
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Low turnout, whale capture and the case for next‑gen DAOs
Buterin’s post comes as DAO ecosystems are growing but struggle with participation and concentration.
DAO tokens have a market capitalization of at least $17.5 billion, according to CoinMarketCap.
While mature DAOs like Aave DAO and the Optimism Collective have used onchain governance to manage major decentralized finance (DeFi) protocols and fund public goods, Buterin argued that projects designing new oracles or governance systems should treat DAO design and the surrounding communication layer as “50% of their job, not 10%,” if they want Ethereum’s decentralized base layer to carry through to the apps built on top.
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