Stani Kulechov, the founder of decentralized lending protocol Aave, has suggested that decentralized autonomous organizations (DAOs) may require structural changes, particularly regarding how much decision-making power is given to token holders compared with leadership teams.

Aave founder calls for changes to DAO governance

Kulechov shared his views in a post on X on Tuesday, following a series of governance debates surrounding the future direction of the Aave protocol. According to him, operating DAOs in their current form can be “extraordinarily difficult” because governance processes often become slow and complex.

He pointed out that proposals can require weeks of forum discussions, temperature checks and multiple rounds of voting before reaching a decision. While DAOs are designed to function without centralized leadership and rely on community consensus, participation rates across many DAO systems are estimated to be between 15% and 25%.

Low engagement levels can create challenges, including the risk of power concentrating among a smaller group of participants and difficulties in achieving effective decision-making. “DAOs also become politicized very quickly and it's easy for voting to become about attention. Participants take sides, lean toward the loudest voices, and form political alliances to get their own proposals passed later,” Kulechov said.

He also argued that governance structures in some cases resemble corporate bureaucracy but without the accountability mechanisms typically associated with traditional organizations. “It can often feel like we took the worst parts of corporate bureaucracy and removed the parts that create accountability in the name of decentralization. But that doesn’t mean DAOs are doomed. They are far from that,” he added.

Rethinking how DAOs balance code, transparency and leadership

Kulechov suggested that the future development of DAOs may involve preserving the elements that function effectively while modifying those that hinder efficiency. In his view, the rules governing protocols could remain embedded in code, since DAO decisions are generally executed through smart contracts on blockchain networks. Treasury transparency could also remain a core feature, allowing all participants to see how funds are managed. Token holders would continue to contribute to major decisions affecting the protocol.

However, he argued that token holders may not need to vote on every operational detail. Day-to-day management of decentralized protocols often requires dedicated teams capable of making timely decisions.

“Someone needs to wake up every morning with the full context in their head and make hard calls,” he said.

Kulechov added that accountability within such a model could still remain transparent because decisions and performance would be recorded on-chain.

“The difference is that their decisions and performance are all on-chain and transparent, and token holders can fire the team when objectives are not met. Accountability is verifiable, and that is what separates this from a traditional company. There is no vendor lock-in.”

Governance tensions emerge within the Aave ecosystem

The discussion about DAO governance emerged alongside ongoing debates within the Aave community. A proposal known as the “Aave Will Win Framework” recently passed a temperature check on March 1, drawing attention to governance dynamics within the protocol.

Shortly afterward, one of the largest governance delegates involved in the ecosystem, the Aave Chan Initiative, announced plans to end its participation in the Aave DAO. The decision was reportedly linked to concerns regarding governance standards and voting processes during the proposal discussions.

Earlier this year, the community also debated another governance proposal that aimed to transfer control of Aave’s brand assets and intellectual property to the DAO. That proposal ultimately failed, further highlighting ongoing discussions about the protocol’s governance structure and long-term direction.

Sources:

https://cointelegraph.com/news/aave-founder-says-daos-must-evolve-governance-conflicts

https://x.com/StaniKulechov/status/2031365539449209146

https://x.com/aave/status/2022021942027727344