Author: Pink Brains
Compiled by: TechFlow TechFlow
TechFlow Dive: 2025 marks a crucial inflection point for decentralized governance (DAO). After years of idealistic experimentation, mainstream protocols are beginning to address core pain points such as power distribution, accountability mechanisms, and sustainability. This article, written by Pink Brains, a senior DAO representative, draws on his practical experience of casting 725 votes in top protocols like Aave, Lido, and Gnosis to provide an in-depth analysis of the shift in DAO models from "community self-governance" to "hybrid operation."
The author points out that simple governance tokens are no longer sustainable, and future DAOs will evolve towards economic alignment, legal entityification, and AI-assisted decision-making. This is not only a review of governance but also a prophecy of the evolution of Web3 organizational structures in 2026.
The full text is as follows:
2025 marks a turning point for decentralized governance.
After years of experimentation, the major agreements have begun to address fundamental issues concerning the distribution of power, accountability, and sustainability.
These answers are not always pleasant, but they are necessary.
What we achieved in 2025
2025 will also be our first year operating as an active DAO delegate.
- 725 votes were cast in 18 agreements.
- It has more than 8 million votes.
- Top 10 representatives of Aave and Lido
- Velora's top 3 representatives
- The top 6 representatives of Gnosis
This perspective, based on actual governance work, allows us to clearly understand the patterns of reshaping DAOs in 2025 and define their trajectory into 2026.
Changes to the DAO in 2025
The shift in operating model: from pure community governance to hybrid control
The most significant change in 2025 will be the shift from simple community governance to a hybrid model with clearer operational control.
- @arbitrum introduced the Operations Company (OpCo) to channel all DAO operations through a unified structure.
- @JupiterExchange suspended governance entirely for nearly six months to reassess its approach.
- @Uniswap launched the DUNI framework, which centralizes operational authority.
- @Gnosis 's DAO executed a hard fork amidst reduced community participation. Scroll , on the other hand, transitioned to an architecture led by its CEO.
- @Scroll_ZKP has suspended its DAO and is now focusing on centralized governance.
- Recently, the Celo Foundation merged with @cLabs into a unified core contributor organization.
The motivation for this shift was that the DAO had reached its expansion limits. Execution became the bottleneck. Community-wide voting was often too slow for operations, too noisy for technical nuances, and too vulnerable for security-sensitive actions.
Therefore, governance power is concentrated in smaller, high-context groups, while the broader community shifts to oversight functions, as will be demonstrated in the following sections.
Fewer voters, but more concentrated power.
In 2025, the number of proposals and voting participants in major DAOs both decreased significantly. However, the voting power behind each proposal remained strong.
- Lido saw increased participation after adopting a dual governance framework.
- Arbitrum and Uniswap still have the highest overall participation, but the number of voters has declined in both.
Caption: DeFi State of the World Report 2025 from DeFiLlama
This does not indicate a failure of governance. On the contrary, governance has become more bundled, more operationally abstract, and less frequent.
Governance influence has shifted to a small number of highly active delegates and heavy capital participants.
Value accumulation for token holders
“Token buyback,” “buyback and burn,” and “fee switch” became the core themes of 2025.
For years, the utility of tokens has revolved around voting rights and incentive distribution, but the economic value provided to token holders has been negligible. 2025 changed this equation.
- Lido employs a buyback framework.
- Uniswap DAO activated the long-awaited fee switch, promising to burn nearly $600 million worth of UNI tokens.
- Aave has implemented a token buyback mechanism. Optimism has launched a buyback program.
- CoW Protocol enhances the profitability of solvers in a way that benefits token holders.
This trend addresses a key challenge in token economics. Buybacks and burns reduce the circulating supply, making tokens more scarce. If demand remains stable, prices will strengthen. When token holders can truly benefit from the protocol's success, they will be more incentivized to buy, hold, and participate in governance decisions long-term.
Who truly owns DAO?
Two major controversies forced the DAO to confront its structural flaws.
- Gnosis voted to terminate Karpatkey's treasury mandate due to a rate dispute, poor performance, and a loss of approximately $700,000 related to liquidity issues.
- The conflict between Aave DAO and Aave Labs escalated after it was discovered that approximately $10 million annually in exchange fees from CoW Swap integrations were flowing to Aave Labs instead of the DAO. The vote on brand ownership failed, and the dispute left behind a more difficult question: what exactly does "DAO ownership" mean when the core team controls development and distribution?
These conflicts forced the agreement to fill gaps in accountability and governance structures.
Legal infrastructure is adapting to DAO
Despite the growth of DeFi, most DAOs still lack a clear legal structure, which increases liability and regulatory risks as the scale of protocols expands.
While jurisdictions like Wyoming have introduced the DAO LLC framework, and Switzerland offers a well-established legal path, most DAOs remain in a legal gray area.
Trend forecast for 2026
Centralized DAOs as a new practice
The agreement will develop a clear framework to define “community decision-making” and “operational decision-making”, thereby transcending the false binary opposition of “complete decentralization” or “complete centralization”.
- Operational execution: will be handled by the Labs team, not the foundation.
- Community oversight: DAO representatives and the community will be responsible for Treasury strategy, long-term direction, and major structural decisions.
Governance shifts to risk management infrastructure
The DAO of the future will no longer resemble a forum filled with idle chatter. More teams will break down decisions into concave decisions and convex decisions.
Concave problems require:
- Pre-approved guardrails and automated execution.
- Professional oversight (risk service providers, auditors, security teams).
- A rapid response framework for emergencies and market shocks.
- Fewer proposals, but each decision has a greater economic impact.
Convex problems (such as product direction) require decisive leadership. In this case, the DAO acts as a "brake" or "checkpoint" rather than a "steering wheel".
By 2026, this will become the standard configuration for lending, stablecoins, perpetual contracts (Perps), and any protocols where financial risks could quickly accumulate.
The end of governance tokens? Value capture must be established.
Continuing into 2026, tokens that only have governance functions will find it difficult to maintain long-term participation.
If they don't see potential for growth, delegates, whale, and strategic holders will not continue to protect the system. Protocols will increasingly adopt at least one value growth path:
- Token buyback framework.
- Cost sharing or revenue sharing.
- Staking is linked to the protocol's cash flow.
- Treasury strategies aimed at supporting the value of tokens.
Holders are motivated to stay involved and protect the system only when they can derive economic benefits from its success.
Legal structure changes from optional to necessary
Regulatory pressure and real-world legal challenges will drive DAOs toward formal entityhood , seeking a balance between decentralized governance and legal clarity.
Professional authorization
As governance becomes more complex, token holders will increasingly delegate authority to full-time professional representatives. While this may lead to a concentration of voting power, it could improve the quality of decision-making. At the same time, weaker representative bodies that cannot be economically self-sufficient will face closure as governance becomes increasingly professional, political, and costly.
Privacy, AI, and Futarchy (Future Governance)
Open governance is a social game. When every vote is publicly visible, decisions are influenced by reputation, pressure, and alliances, rather than purely for the best interests of the agreement. Therefore, governance privacy will become even more important in the future.
AI will solve decision fatigue. It can assist in analyzing proposals and automatically vote on daily upgrades based on user-defined preferences, requiring human intervention only when disputes arise or significant impacts are involved.
Futarchy markets will also play a larger role in DAOs. They allow market signals to predict which options are likely to create value. Gnosis is testing this model, using a prediction market of retail investors to reflect sentiment toward proposals.
Encryption is maturing, and so is DAO.
The shifts we're seeing in DAO operations, economic alignment, accountability conflicts, and professionalization represent maturity , not the end of the DAO.
DAOs are evolving from ideological experiments into organizational structures that balance "decentralized oversight" with "proven efficiency." We believe that DAO governance will become more meaningful if the team can align with the community's interests: moving quickly when action is needed, ensuring growth benefits token holders, and holding all participants, including the core team and representatives, accountable.
As Vitalik said: We need more DAOs, but we need different and better DAOs.
If you agree with the value of DAO, we can be your voice.
Effective delegation is more than just casting a vote; it means doing real work: reading proposals, staying active in the forum, understanding the risks, and voting against wrong decisions, even if it doesn't fit in with the group.
This is how we operate as representatives: helping the protocol grow while staying aligned with community motivations through clear communication and educational content.
