DAO Governance Structure Risks: Most Projects Don't Care

Risks in DAO Governance Structures

DeFi researcher Ignas recently highlighted major issues in DAO governance structures. While Ethereum co-founder Vitalik Buterin advocates for better DAOs, Ignas argues that real-world DAOs are primarily controlled by three groups: core teams or foundations, professional delegates, and whales.

Professional delegates emerged because most token holders show little interest in governance. Data indicates that 95% of votes are related to technical upgrades, requiring dedicated individuals to monitor and manage these proposals, creating a tripartite system that seems functional yet hides significant risks.

Governance Flaws Leading to Crises

The weaknesses of this structure became evident in 2024. A community vote 'legally' moved $24 million worth of tokens from a major project’s treasury to an unfamiliar and untraceable multi-sig address, sparking widespread debate on DAO governance security.

While the system could improve if project founders genuinely cared about DAOs, the reality is that many don’t prioritize governance in practice.