Vitalik says DAOs must evolve beyond token-voting

Vitalik Buterin, co-founder of Ethereum, stated on Monday that additional DAOs are needed in the cryptocurrency field, but they must be reinvented entirely and go beyond token-holder voting. He made the case in a post on X that for DAOs to live up to their initial promise, improved governance, privacy, and decision-making tools are crucial.

Vitalik explained that decentralized autonomous organizations, systems of code and regulations residing on decentralized networks that may manage resources more effectively than traditional institutions, were a major source of inspiration for the initial impetus to construct Ethereum. 

Since then, DAOs have mostly evolved into token-holder voting-based treasuries, a model that “works” but has been widely replicated without much innovation. 

However, Vitalik claimed that this approach is ineffective, susceptible to capture, and ignores the fundamental flaws in human politics.

Vitalik Buterin explains why DAOs are critically needed

Vitalik argued that better DAOs are necessary to build stronger oracle systems that support prediction markets, decentralized stablecoins, and other critical DeFi infrastructure. He cautioned that token-based oracles are susceptible to structural economic constraints and whale manipulation, making the issue as much a social and governance issue as a technical one.

Vitalik added that the crypto industry needs DAOs to maintain lists. This includes lists of canonical interfaces, lists of token contract addresses, and listings of applications that are recognized as safe or not fraudulent. He claimed that DAOs are necessary for the cryptocurrency sector to launch projects swiftly. 

The co-founder of Ethereum went on by explaining that DAOs are essential for long-term project maintenance. He argued that long-term project maintenance will enable new contributors to secure the financing needed to advance the project and ensure that communities can continue even if the original team departs.

Building on these practical functions, Vitalik also explored how DAOs might improve decision-making and governance to address a variety of issues successfully.

Vitalik Buterin revealed on his personal website and blog that he examines DAO decision-making using the “convex vs. concave” concept. He argued that DAOs should optimize reliability for concave problems by combining information from multiple sources, while they need tools to constrain decision-makers in convex situations. 

In another report in April of last year, he claimed that for DAO governance to be effective, decision fatigue must be addressed. In the absence of privacy, involvement becomes a social game, and continuous decision-making eventually leads to declining interest.

Vitalik on DAOs, ZK, and L2 scalability

Building on the importance of strong governance and decision-making, Vitalik emphasized that modern technologies such as AI, zero-knowledge proofs, and sophisticated communication tools may usher in a new era of more efficient, scalable DAOs.

Vitalik Buterin said that AI must be used carefully. He cautioned that “ we must ‘not’ put full-size deepseek (or worse, GPT 5.2) in charge of a DAO and call it a day. Rather, AI must be put in thoughtfully, as something that scales and enhances human intention and judgement, rather than replacing it.”

He maintained that zero-knowledge proofs and AI should be considered while developing new governance systems, and the communication layer should account for 50% of the labor, not 10%.

Additionally, in a separate announcement on Monday, Vitalik discussed recent advancements in Ethereum’s layer-2 scaling strategy, emphasizing the significance of strong governance and careful application of zero-knowledge proofs technology. 

He pointed out that the development of native rollup precompiles and the deadlines for fully adopting ZK at L1 are now aligned, resolving earlier issues with composability and withdrawal delays.

Vitalik emphasized the need for synchronous composability across L2s and offered strategies for integrating rollups with low-latency preconfirmations while ensuring that bespoke features can work with conventional EVM rollup precompiles.

Want your project in front of crypto’s top minds? Feature it in our next industry report, where data meets impact.