3 DAO Problems According to Vitalik Buterin: Why a New Design is Needed?

Jakarta, Pintu News – Decentralized Autonomous Organizations (DAOs) were once seen as a game changer in the governance of cryptocurrency communities and projects, but according to Vitalik Buterin, co-founder of Ethereum (ETH), the current DAO model has strayed far from its original purpose and requires a more effective, equitable, and sustainable design to support the future Web3 ecosystem.

1. Main Problems of Existing DAOs

Vitalik Buterin believes that many modern DAOs have transformed into systems where only wallets with large amounts of tokens determine decisions through voting mechanisms. This model essentially turns DAOs into a kind of “treasury controlled by large token holders”, which he believes no longer reflects the true spirit of decentralization.

According to Buterin, this design is often easily captured and manipulated, as the voting power concentrated in a small number of members makes the process less inclusive and prone to domination by whales or groups with large capital. It can also lead to low DAO participation as many token holders become inactive or lose interest in engaging in decision processes that feel biased or ineffective.

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2. Buterin: DAO Not Enough Just Voting Tokens

Vitalik Buterin argues that token-based voting alone is not enough to create effective decentralized governance. Other challenges such as privacy concerns anddecision fatigue can degrade the quality of decisions in DAOs.

Buterin underscored the importance of adopting technologies such as zero-knowledge proofs (ZKP) to enhance privacy in DAO governance, so that members can vote without publicly exposing their identities or preferences. In addition, he also sees the potential of using artificial intelligence (AI) to help reduce the burden of repetitive voting and speed up the decision evaluation process without eliminating the role of humans in important decision-making.

3. DAO Should Focus on Infrastructure, Not Just Treasury

According to Buterin, the original purpose of DAOs was to manage resources and coordinate activities more efficiently than traditional government or corporate systems. However, the dominant trend today is instead to focus on treasury management through simple voting, which falls short of addressing the more complex issues in the crypto ecosystem.

He emphasized that DAOs should be designed to handle important functions such as more secure oracles, blockchain dispute resolution, and long-term maintenance of projects that cannot be solved by token voting alone. This approach could help DAOs become a more solid piece of infrastructure for Decentralized Finance (DeFi), stablecoins, and other blockchain applications that require governance that is resistant to manipulation and domination by certain parties.

4. New Design Challenges for Future DAOs

Buterin also pointed out that in order to achieve DAO reform, there needs to be a paradigm shift in the way the crypto community views governance. Technologies such as advanced on-chain communication, utilization of powerful oracles, and better coordination of communication between members should be part of the modern DAO design toolkit.

By focusing on a stronger governance stack, DAO can become a more effective tool for new project launches, long-term resource management, and on-chain conflict resolution without sacrificing true decentralization.

5. Buterin’s Relevance to the Future of Crypto

Vitalik Buterin’s views sparked a discussion on how cryptocurrency ecosystems can evolve to be more mature and coordinated in terms of governance. Instead of relying on simple voting mechanisms, he encourages the creation of DAOs that are more robust and focused on real problems in modern blockchains.

Such an approach is in line with the increasingly complex needs of the DeFi and Web3 markets that require more advanced governance solutions than are currently available.

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Reference:

• Bitcoin News. Vitalik Buterin Says DAOs Need a Rethink Beyond Token-Holder Voting. Accessed January 27, 2026.