Ethereum co-founder Vitalik Buterin has called for brand new designs for decentralized autonomous organizations (DAOs), arguing that the sector needs greater than just token voting treasuries if it wants to enhance traditional corporate and political structures.
In a post on Monday
That model is widely copied, but it surely is “inefficient, vulnerable and completely misses the purpose of mitigating the weaknesses of human politics,” he said.
Buterin argued that DAOs should solve specific infrastructure problems, starting with higher oracles, on-chain dispute resolution, and long-term project ownership.
He also highlighted the necessity for DAOs for subjective disputes (e.g. insurance results), maintaining common lists equivalent to anti-fraud registries and standard formats to create short-lived funding instruments and keeping projects alive after core teams disappear.
Vitalik Buterin calls for brand new designs of DAOs. Source: Vitalik Buterin
Concave vs. convex: different DAOs for various problems
Buterin framed his pondering using his previous “convex vs. concave” governance lens. For “concave” problems where trade-offs are “higher than a coin toss,” DAOs should maximize robustness by aggregating inputs from many sources.
For “convex” problems that require crucial decisions, he said it’s more appropriate to permit strong leadership and treat decentralization in a way that holds leaders accountable, moderately than a whole substitute.
For such systems to work in practice, DAOs must resolve privacy issues and “decision fatigue,” Buterin said.
Without privacy, governance becomes a “social game,” and when participants are consistently asked to vote, engagement wanes 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 guard privacy.
He also suggested that artificial intelligence could help reduce decision fatigue by supporting evaluation or allowing users to delegate voting to locally controlled models, while warning that DAOs are powered by AI.
Low voter turnout, whaling and the case for next-generation DAOs
Buterin's contribution comes at a time when DAO ecosystems are growing but combating participation and focus.
According to CoinMarketCap, DAO tokens have a market capitalization of at the least $17.5 billion.
While mature DAOs like Aave DAO and the Optimism Collective have used on-chain governance to oversee major decentralized finance (DeFi) protocols and finance public goods, Buterin argued that projects designing recent oracles or governance systems should treat DAO design and the encompassing communications layer as “50% of their work, not 10%” in the event that they want Ethereum's decentralized base layer to hold over to the apps built on top of it would.
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