Ethereum co-founder Vitalik Buterin declared that current decentralized autonomous organizations have devolved into inefficient token-voting systems vulnerable to whale manipulation and political capture.
"We need more DAOs - but different and better DAOs," Buterin wrote in a post on X, arguing that projects must treat governance and communication as "50% of their job, not 10%."
The Ethereum founder identified fundamental flaws in token-based governance that undermine the original vision of DAOs as robust systems superior to traditional corporations and governments.
What Happened
Buterin outlined five critical areas where improved DAO designs are urgently needed: better oracle systems for stablecoins and prediction markets, onchain dispute resolution for insurance and advanced contracts, maintaining lists of verified applications and token addresses, launching projects quickly, and ensuring long-term project maintenance after founding teams depart.
He criticized current token-based oracles as fundamentally limited, noting they "cannot have a cost of attack higher than their market cap" while simultaneously extracting rent that exceeds the discount rate.
"The problem here is not greed," Buterin stated, emphasizing that flawed system architecture rather than participant behavior drives DAO failures.
The co-founder introduced a "convex vs concave" framework distinguishing between problems requiring compromise solutions versus those demanding decisive leadership.
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Why It Matters
Buterin identified privacy and decision fatigue as primary obstacles preventing effective DAO participation.
"Without privacy, governance becomes a social game," he warned, advocating for zero-knowledge proofs to enable confidential voting that reduces social pressure and manipulation risks.
However, Buterin explicitly cautioned against deploying large language models as autonomous DAO decision-makers.
Instead, AI should function as "decision-filters" that scale human intention through individual-level assistants or platform-level consensus mechanisms, he argued.
Buterin pointed to pol.is and DeepFunding as examples of consensus-finding communication tools that should become integral to the "DAO stack" alongside technical governance infrastructure.
"A multisig plus well-designed consensus-finding tools can easily beat idealized collusion-resistant quadratic funding plus crypto twitter," he wrote, emphasizing the communication layer's importance.
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