Rich by Coin

Ethereum has sacrificed too many core values and is going back to its ideals, co-founder says. “The original drive to build Ethereum was heavily inspired by decentralised autonomous organisations,” Buterin wrote on X. “We need more DAOs — but different and better DAOs.” DAOs are a kind of crypto collective where owners of a DeFi protocol’s governance token can propose and vote on changes to its code and how best to allocate resources. Buterin’s pledge comes after trust in the DAO structure has deteriorated in recent years.

Major scandals have erupted and put into question the viability of decentralised governance. Critics argue that the DAOs governing DeFi lender Aave and decentralised exchange Uniswap have little control over major decisions at their respective protocols. Other DAOs have been accused of mismanaging funds, resulting in hundreds of millions of dollars evaporating with little to show for it. Inactivity and voter apathy has left many DAOs vulnerable to hostile takeovers.

Overall, DAOs are becoming quieter and less decentralised, according to a joint report by DefiLlama and DL Research. Buterin is no stranger to the issues DAOs face. The current interaction of DAOs are inefficient, vulnerable to capture, and fail to mitigate the weaknesses of human politics, he said. Here are Buterin’s five arguments for more and better DAOs.

Many crypto products rely on oracles — tools that tell the blockchain things like asset prices or other offchain information. Buterin says the current oracle designs are fundamentally flawed and easy to manipulate. If voting is based on tokens, big holders can push answers their way. If humans control the data, it stops being truly decentralised. Today, decentralised stablecoins, prediction markets, and other basic building blocks of DeFi are built on oracle designs that we are not satisfied with,

If humans control the data, it stops being truly decentralised. Today, decentralised stablecoins, prediction markets, and other basic building blocks of DeFi are built on oracle designs that we are not satisfied with,