Stany Kulechov, the founder of the decentralized lending platform Aave, says that decentralized autonomous organizations (DAOs) need to be rethought, namely how much the token holders vote compared to the stake of the leaders.
His comments followed management discussions about the protocol’s future.
Kulechov said in an X post on Tuesday that DAOs in their current form are “extraordinarily difficult” due to internal conflicts and proposals that can involve weeks of forum posts, temperature checks and multiple votes.
DAOs are intended to operate without a central leadership, with all decisions made by community consensus; however, the average DAO participation rate is estimated to be between 15% and 25%, which can lead to issues such as centralization of power and inefficient decision-making.
“Daos also become politicized very quickly and it becomes easy for them to vote. Participants take sides, rely on the loudest voices and build political alliances to get their proposals accepted later,” Kulechov said.
“It often feels like we’ve taken the worst parts of corporate bureaucracy and removed the parts that create accountability in the name of decentralization. But that doesn’t mean DAOs are doomed. They’re far from it,” he added.
DAOs should keep what works, leave the rest
Kulechov said the way forward should involve DAOs maintaining what they “did right” and fixing “what they did wrong.”
He suggests that rules should remain in code, DAOs typically handle decisions via smart contracts on the blockchain, the treasury should remain publicly visible, and token holders should have input into key decisions.
related to: Vitalik Buterin suggests using AI to strengthen DAO governance
However, Kulechov argues that token holders don’t have to vote on everything, as it takes teams and managers to run the protocol on a day-to-day basis, not thousands of voters.
“One has to wake up every morning with the full context in one’s head and make tough calls,” he said.
“The difference is that decisions and execution are all chained and transparent, and token holders can fire the team when goals aren’t met. Accountability is auditable, and that’s what separates it from a traditional company. There’s no vendor limit.”
Aave management suggestions lead to withdrawal
Kulechov’s statement came against the background of the proposal “Aave framework will win”, which passed the temperature test on March 1.
Shortly after, a key governance advocate, the Aave Chan Initiative, announced it was ending its involvement with the Aave DAO due to concerns with governance standards and voting dynamics during the offering.
In January, another proposal to transfer control of Aave’s brand assets to its DAO failed, sparking renewed debate within the Aave community about the protocol’s long-term direction and governance structure.
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