Ethereum Founder Vitalik Buterin Calls for 'Different and Better DAOs'

Ethereum founder Vitalik Buterin has argued that modern DAO design is “inefficient, vulnerable to capture, and fails utterly at the goal of mitigating the weaknesses of human politics.”

In a tweet, Buterin said he once believed that systems of code and rules existing on decentralized networks could “manage resources and direct activity more efficiently and more robustly” than conventional governments and corporations.

However, he claimed that since Ethereum’s founding, DAOs in practice have drifted toward “essentially referring to a treasury controlled by token-holder voting.” This, he argued, leaves them open to control by centralized actors and has made many observers cynical about DAOs as a concept.

“We need more DAOs – but different and better DAOs,” Buterin wrote.

Among the solutions he proposed were improvements to the oracles that power DAOs and DeFi protocols. In crypto, blockchain oracles connect blockchains to external real-world systems, enabling smart contracts to execute by bridging on-chain and off-chain data. Buterin criticized both token-based oracles and human curation, calling the latter “not very decentralized.”

Buterin identified two core problems that he thinks must be solved for DAOs to function effectively: privacy and decision fatigue.

“Without privacy, governance becomes a social game,” he said.

He said modern technology could open “the door to a renaissance” in terms of solving the above problems, specifically the use of zero-knowledge proofs (ZKPs) for privacy. In cryptography, a zero-knowledge proof is a method used to prove that something is known without revealing the known information directly, which can be useful for privacy-centric applications.

Buterin also highlighted the ability of AI to reduce decision fatigue, but warned against putting a mainstream large language model like OpenAI’s GPT or China’s DeepSeek in charge of a DAO.

Zero-knowledge proofs and DAOs

Zero-knowledge specialist Harry Halpin, CEO and co-founder of mix network Nym Technologies and a former research scientist at MIT, told Decrypt that the technology could help DAOs function more fairly.

“DAOs are the future of democratic politics, and just as we don’t want our votes for president in a national election to be public, we don’t want our votes in token governance to be public either,” Halpin said, adding that, “Zero-knowledge proofs are one way to achieve that.”

Halpin acknowledged that zero-knowledge DAOs are not yet “technically mature”, but said Nym would be happy to adopt them once the software is ready. Halpin pointed to projects such as AnonDAO, a project associated with privacy-centric Layer-1 blockchain DarkFi, as proof that private DAO governance is feasible in practice.

Members of the DarkFi project told Decrypt they were inspired by the AssangeDAO project, which helped to raise over $50 million for Australian political activist Julian Assange.

Rachel Rose O’Leary, a founder and core developer at DarkFi, told Decrypt that “transparency forced us to hand control of the funds to an off-chain nonprofit foundation,” during her work on AssangeDAO.

“DAOs cannot do real shit without anonymity,” she told Decrypt. “Give DAOs anonymity and you give them real political power.”