Vitalik Buterin, one of the founders of Ethereum, ignited a new debate in the cryptocurrency world with his harsh criticism of decentralized autonomous organizations (DAOs). Arguing in his statement today that DAOs have not failed but deviated from their initial goals, Buterin stated that the current structures weaken the basic components of the cryptocurrency ecosystem. Reminding that DAOs were initially designed as more efficient decision-making mechanisms than states and companies, Buterin emphasized that at this point, most of them have turned into treasury management tools based only on token voting. Buterin said that the solution should not be abandoned despite this situation and called for a radical redesign.
Buterin: DAOs have moved away from their original purpose
According to Buterin, DAOs have moved away from their original purpose, and the main problem with modern DAO structures is that token-based governance is inefficient and open to manipulation. The fact that large token holders can easily influence decision-making processes causes governance to shift from a technical to a political basis. This situation makes it difficult to make long-term and complex decisions, and undermines developers’ trust in DAO models.
Referring to the early vision of Ethereum, Buterin stated that the problem was caused by systemic design errors rather than greed. According to him, faulty “oracle” constructs, that is, the weakness of the mechanisms that carry data from the outside world into the Blockchain, prevent DAOs from working properly. Failure to inform decisions with accurate data makes governance fragile.
This table also explains why DAOs are often ineffective. Although token voting seems democratic in theory, in practice low participation creates problems such as power concentration and decision fatigue. As a result, DAOs can turn into structures that maintain the status quo rather than producing innovation.
Why Are DAO Designs Critical for the Cryptocurrency Ecosystem?
Despite all his criticism, Buterin made it clear that DAOs are indispensable for cryptocurrency infrastructure. Price oracles used in stablecoins and DeFi protocols stated that strong governance mechanisms are needed in areas such as dispute resolution and management of trusted practice lists for on-blockchain insurance models.
DAOs also play a critical role in quickly implementing projects and ensuring sustainability during periods when founding teams remain in the background. Without strong governance, it becomes difficult for these systems to survive in the long term. For this reason, Buterin emphasized the need to develop new models that require less voting, encourage participation, and prioritize technical accuracy.
Buterin’s suggestions include zero-knowledge proofs that preserve privacy, AI-powered tools to reduce the burden of voting, and new communication platforms that facilitate consensus. While some participants in the discussion suggested that models with more centralized structures such as Chainlink solved some problems, many developers admitted that the search for innovation in DAO design had almost stopped.
