Stanny Kulichov, founder of decentralized lending platform Aave, says decentralized autonomous organizations (DAOs) need to rethink how much token holders vote rather than leaders’ input.
His comments came in the wake of refereeing disagreements over the future of the protocol.
In their current form, Kuleshov said in an
DAOs aim to operate without core leadership, with all decisions made through community consensus; However, average participation rates in DAOs are estimated at 15% to 25%, which can lead to problems such as centralization of authority and ineffective decision-making.
“Decentralized autonomous organizations are also politicized very quickly and it is easy for voting to become a focus,” Kulichov said. “Participants take sides, lean toward higher votes, and form political alliances to pass their own proposals later.”
“It may often seem like we have taken the worst parts of corporate bureaucracy and removed the parts that create accountability in the name of decentralization,” he added. “But that does not mean that DAOs are doomed. Far from it.”
DAOs should keep what works, and leave the rest
The way forward, Kuleshov said, needed to involve decentralized autonomous organizations in maintaining what they “got wrong” and fixing “what they did wrong.”
He suggests that the rules should remain in the code, decentralized autonomous organizations typically resolve decisions through smart contracts on the blockchain, the treasury should remain visible to everyone, and token holders should still have input into key decisions.
Related to: Vitalik Buterin suggests using artificial intelligence to enhance DAO governance
However, Kuleshov believes that from now on, token holders should not vote on everything, because day-to-day operation of the protocol requires teams and leaders, not thousands of voters.
“Someone needs to wake up every morning with the full context in their head and make tough decisions,” he said.
“The difference is that their decisions and performance are all on-chain and transparent, and token holders can fire the team when goals are not met. Accountability can be verified, which is what separates this from a traditional company. There is no vendor lock-in.”
Referee Aave’s suggestion raises an exit
Kulichov’s comments come amid a proposal titled “Aave Will Win Framework”, which passed a temperature check on March 1.
Shortly after, a major governance delegate, the Aave Chan Initiative, announced that it would end its involvement with the Aave DAO due to concerns regarding governance standards and voting dynamics during the proposal process.
In January, another proposal to transfer control of Aave’s brand assets and intellectual property to its DAO failed, sparking debate within the Aave community about the protocol’s long-term direction and governance structure.
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