Stani Kulechov, founder of the decentralized lending platform Aave, says decentralized autonomous organizations need to rethink how governance works, particularly the balance between tokenholder voting and leadership input.
In a post on X on Tuesday, Kulechov said DAOs in their current structure are “extraordinarily difficult” to operate due to governance conflicts and lengthy decision-making processes.
DAO governance challenges
DAOs exist as decentralized organizations which make decisions through community voting instead of having centralized leadership.
The organization experiences low participation rates which researchers estimate to fall between 15% and 25% of the total membership.
Your completely free resource hub designed to boost your knowledge of cryptocurrencies
Kulechov explained that this situation creates two main problems because it leads to centralized authority for a few voters while decision-making processes become slower and less efficient.
He warned that governance talks develop into political battles because participants start supporting dominant speakers while creating partnerships to advance their ideas.
He said that the organization creates an atmosphere which removes all elements of corporate accountability while preserving only its most inefficient bureaucratic functions.
Keeping what works in DAOs
The Kulechov defended DAOs because their essential elements remain intact despite the ongoing evaluations of their effectiveness.The governance framework needs to maintain its current coding system because it should allow users to see budget details through onchain treasury management to control major protocol developments which they should maintain.
The daily business procedures should operate without needing approval from all program users according to his viewpoint. Kulechov said that someone must take charge of operations because they need complete knowledge to make difficult decisions.
The leadership teams need to handle operational work while they stay responsible for their actions to the token holders.
Governance tensions within Aave
Kulechov’s comments come amid debate over Aave’s governance structure.
A recent proposal known as the “Aave Will Win Framework” passed a preliminary temperature check vote on March 1.
Soon after, a major governance delegate, Aave Chan Initiative, announced it would step away from its role in the Aave DAO, citing concerns over governance standards and voting dynamics.
Earlier this year, another proposal to transfer control of Aave’s brand assets and intellectual property to the DAO failed, sparking further discussion about the protocol’s long-term governance model.
