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Co-founder of Ethereum Vitalik Buterin reaffirmed its support for Decentralized Autonomous Organizations (DAOs)arguing that in some circumstances they can be more efficient and fairer than a traditional corporate structure.

In theory, DAOs are collectively owned and managed by their members and have no central direction. All decisions on aspects such as the use of treasury funds or protocol improvements are made by voting on proposals submitted to the community.

In the lengthy Tuesday post on his website, Buterin describe that critics often claim that DAO governance is inefficientthat DAO idealists are naive and that traditional corporate governance structures with boards and CEOs are the optimal methods for making key decisions.

However, the Ethereum co-founder believes that “this position is often wrong” and asserts that even naive forms of compromise are, on average, likely to outperform centralized corporate structures in certain situations. Although he thinks it depends on the type of decision, which he says falls into two categories: convex and concave.

Examples of convex decisions include pandemic response, military strategy, and technology choices in cryptographic protocols, while concave decisions include judicial issues, funding of public assets, and tax rates.

“If a decision is concave, we would prefer a compromise, and if it is convex, we would prefer a draw,” he wrote.

According to Buterin, when decisions are convex, decentralizing the decision-making process can lead to “confusion and shoddy compromises.” However, when concave, “relying on the wisdom of crowds can yield better answers:”

“In these cases, DAO-like structures with large amounts of diverse input going into decision-making can make a lot of sense.”

DAOs typically embrace decentralization to defend against external attacks and censorship. Due to the nature of the space and the remote, online nature of some projects, it may be more difficult to “do informal in-person background checks and ‘smell tests’ for character.”

Buterin argues that this is exactly why DAOs are needed, arguing that the decentralized world must “distribute decision-making power between After decision-makers, so that each individual decision-maker has less power, and therefore collusion is more likely to be exposed and revealed.

He admits that DAOs are not without problems, yet. In some situations, a more centralized structure is needed, such as when an organization operates with central management and has separate groups all working independently.

Grassroots leadership is decentralized, but Buterin says it may be necessary for individual groups to follow a clear hierarchy, adopting a “clear opinion perspective guiding decisions”.

Related: Ethereum co-founder Vitalik Buterin shares his vision for Layer 3 protocols

“A system that was meant to operate stably and immutably around a set of assumptions, when faced with an extreme and unexpected change in those circumstances, needs some kind of courageous leader to coordinate a response. “

Buterin elaborates further, saying that in some cases DAOs may need “the use of business-like forms” to “manage unexpected uncertainty.”

He concludes by saying that for some organizations, even in a crypto world, “much simpler, leader-centric forms of governance, emphasizing agility, will often make sense:”

“But that shouldn’t distract from the fact that the ecosystem wouldn’t survive without some decentralized, non-corporate forms that would keep the whole thing stable.”