- DAOs must move beyond token voting and address real coordination problems across decentralized systems.
- Oracle design and dispute resolution remain critical DAO use cases with unresolved structural limits.
- Privacy tools and AI support are needed to reduce governance fatigue and improve long-term participation.
Vitalik Buterin has outlined a new structure for decentralized autonomous organizations (DAOs), arguing that the next generation of DAOs must move beyond token-holder treasuries and focus on solving concrete coordination problems across decentralized systems.
In an X post, Buterin noted that the original motive behind building Ethereum was tied to DAOs as systems of rules and code capable of managing resources more efficiently than traditional institutions.
However, over time, DAOs have largely come to mean treasuries governed by token-weighted voting, a structure he described as functional but inefficient, vulnerable to capture, and ineffective at addressing the limits of human political processes.
Focus on Infrastructure Rather Than Treasuries
Buterin identified several areas where DAOs remain necessary despite growing skepticism. One of the primary use cases he highlighted was oracle design. He noted that many decentralized stablecoins, prediction markets, and DeFi protocols rely on oracle mechanisms that are either token-based or dependent on human curation.
According to Buterin, token-based oracles face a structural limit because the cost of attacking them cannot exceed their market capitalization, constraining their ability to secure large amounts of value without extracting excessive economic rent.
Dispute Resolution and Onchain Lists
Another area Buterin highlighted was onchain dispute resolution, which he described as essential for advanced smart contract use cases such as insurance. He noted that dispute resolution introduces even higher subjectivity than price feeds, making strong governance structures more difficult to design.
He also pointed to DAOs as tools for maintaining shared onchain lists, including registries of secure applications, known scams, canonical interfaces, and verified contract addresses. These lists, he said, require ongoing coordination and updates that centralized entities may struggle to manage credibly in decentralized environments.
Buterin further outlined DAOs as mechanisms for launching short-duration projects that may not justify forming legal entities, as well as for maintaining projects after original teams disengage. To analyze these roles, he referenced a structure distinguishing between concave problems, where compromise outcomes are preferable, and convex problems, where key leadership is beneficial but must remain accountable.
Privacy, Fatigue, and the DAO Stack
According to Buterin, two unresolved challenges limit DAO effectiveness: privacy and decision fatigue. Without privacy, governance risks becoming a social signaling exercise, while frequent voting can reduce long-term participation. He identified zero-knowledge proofs as a key tool for privacy and stated that artificial intelligence could help reduce decision fatigue if used to support, rather than replace, human judgment.
Buterin concluded, noting that future governance designs must treat communication tools, privacy systems, and coordination mechanisms as core components of the DAO stack, rather than secondary considerations.
Related: Vitalik Buterin Warns of DAO Vulnerabilities, Questions ‘Renting’ Votes
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