Author: arndxt, crypto researcher; Translated by: 0xxz@Golden Finance

I analyzed over 581 DAO projects with 16,246 proposals over a 5-year period.

This covers all projects using the DAO governance platform Snapshot, over 95% of active DAO projects (over 11,000 spaces).

I have summarized this article “The DAO Dilemma” into four key findings.

1. Centralization Paradox

The data paints an impressive picture of growth — 581 DAOs, over 16,000 proposals, spanning 5 years. Membership distribution follows the Pareto principle.

A small number of people hold most of the power.

I can’t help but wonder: are we simply recreating traditional power structures in a blockchain wrapper? The Gini coefficient of token distribution within DAOs would be a telling indicator.

2. Technology time bomb

The lack of IPFS upgrades gives me the chills. This is a classic case of technical debt that could break down as the DAO scales. We’re talking about potential data loss, skyrocketing storage costs, and inefficiencies.

Here’s a thought experiment: what happens when a critical proposal’s data cannot be retrieved due to an outdated IPFS link? The consequences could be dire.

3. The tug-of-war between democracy and efficiency

This study shows a wide range of voting contexts — from budgets to hiring decisions. That’s democracy in action, right? Don’t answer so quickly. I see two huge red flags:

a) Voter apathy: Low voter turnout plagues many decisions.

b) Token-weighted voting: A small number of whales can influence the entire ecosystem.

This creates a governance paradox. On the one hand, we have the ideal of decentralized decision-making. On the other hand, we face the harsh reality of power centralization and community disengagement.

4. Token Dilemma

This is where it gets really interesting. Most DAOs use self-issued tokens rather than established cryptocurrencies like USDT or ETH. This raises serious questions about incentive structures and long-term viability.

Are we witnessing the birth of a strong governance system, or just a complex token pumping scheme? The cynic in me leans towards the latter, but I’m willing to be proven wrong.

The way forward

Despite these challenges, I remain cautiously optimistic about DAOs.

Here's what I think needs to happen:

  • Implement quadratic voting or other mechanisms to balance influence.

  • Prioritize technology infrastructure upgrades, especially in data storage.

  • Create stronger incentives for continued participation in governance.

  • Encourage the use of tokens with more stable value for governance.

This research reinforces my belief that DAOs are at a critical juncture. The promise of decentralized governance is huge, but so are the obstacles.

What do you think?

Are DAOs the future of organizations, or are we witnessing a grand experiment destined to rebuild the system it was designed to replace?

#DAO