Ethereum co-founder Vitalik Buterin recently sparked discussions across the Web3 landscape by advocating for “different and better” decentralized autonomous organizations (DAOs), pushing for governance models beyond the prevalent token-holder voting. His critique, highlighted by various industry reports including a recent piece from The Block in January 2026, underscores a growing recognition of inherent limitations within current DAO structures.
The rise of DAOs promised a new era of decentralized decision-making, empowering communities to govern projects and protocols without traditional hierarchies. However, as these entities matured, issues like low participation rates, voter apathy, and the concentration of power among large token holders—often referred to as “whales”—began to surface, challenging the very principles of decentralization.
Buterin’s insights come at a critical juncture for the blockchain ecosystem, which is grappling with how to scale not just technically, but also socially and democratically. His call is not merely for incremental improvements but for a fundamental rethinking of how these organizations make decisions and represent their diverse stakeholders.
The limitations of token-based voting
The “one token, one vote” paradigm, while seemingly straightforward, often leads to outcomes that contradict the spirit of decentralization. Research from institutions like the Ethereum Foundation has frequently pointed out that this model can create plutocracies, where individuals or entities with substantial capital dictate the direction of a project. This dynamic discourages smaller participants and can lead to decisions that prioritize short-term financial gains over long-term community benefit or innovation.
Furthermore, voter engagement remains a persistent challenge for many DAOs. A 2023 report by DeepDAO revealed that average participation rates in many prominent DAOs hover around 1-10%, indicating a significant disconnect between token holders and active governance. This low engagement can result in critical proposals being passed by a small, unrepresentative fraction of the community, undermining legitimacy and trust.
Exploring new governance paradigms
Buterin proposes a shift towards more sophisticated mechanisms that can better reflect collective will and mitigate existing flaws in DAO governance. Among his suggestions are concepts like quadratic voting, which assigns votes based on the square root of a token holder’s stake, thereby reducing the disproportionate influence of large holders. This method aims to empower a broader range of participants by making it more expensive for single entities to dominate votes.
Another area of exploration involves multi-chamber governance structures or delegated voting, where specialized sub-committees or elected representatives handle specific decisions. The integration of Soulbound Tokens (SBTs), non-transferable digital identities, could also play a role in reputation-based voting, allowing individuals with proven expertise or contributions to have a more significant, non-financialized say in certain matters. These innovations aim to create more resilient and representative decision-making processes.
The call for “different and better” DAOs signifies a maturing phase for decentralized organizations, moving beyond initial ideals to tackle practical challenges. As the Web3 space continues to evolve, the implementation of more equitable and efficient governance models will be crucial for the long-term sustainability and legitimacy of DAOs. Future developments will likely see a blend of these innovative approaches, creating a more robust framework for decentralized collaboration and decision-making.
