The landscape of DAO models is undergoing significant changes, impacting a majority of large organizations. Governance structures are being pushed to their limits, prompting some protocols to revert to partial centralization.
DAO platforms are experiencing evolution in 2026, with some platforms maxing out their governance capabilities. Others are abandoning the model altogether due to sluggishness and the necessity for swift decision-making powers.
Recent estimates indicate that DAOs collectively hold $13.6 billion in liquidity across more than 50,845 organizations, with a significant portion locked in the largest DAO. Governance tokens remain highly active, with their value surpassing $31 billion.
Out of 11.8 million DAO token holders, only approximately 3.3 million actively participate in voting. The level of active voter engagement varies among different protocols and communities. While the DAO model has demonstrated resilience and sustained governance, certain decisions have sparked disputes over time. The primary concern with DAOs is the potential for large stakeholders to dominate the voting process and influence outcomes.
According to a report by Cryptopolitan, Optimism DAO recently faced division within its community regarding a decision to repurchase OP tokens.
Transition to Partially Centralized Governance in DAOs
The previous year was dynamic for projects utilizing a DAO structure in their development. A study conducted by an active voter organization revealed that decentralized governance had reached its capacity.
Consequently, several major DAOs either completely or partially abandoned their voting processes. Arbitrum consolidated all DAO operations within its new OpCo framework. Jupiter halted governance activities for six months to reassess upgrades and revamp processes and incentives. Uniswap also streamlined operational authority under the DUNI framework.
Gnosis implemented hard forks with limited community input, while Scroll shifted towards a CEO-led structure.
Many DAOs associated with operational protocols have acknowledged the scalability issues of their governance processes, highlighting slow voting processes and conflicts. Not all voters possess the technical understanding required, leading to panic-inducing proposals. Consequently, governance has shifted towards specialized groups with contextual awareness, while the broader community has shifted towards oversight roles.
Decline in DAO Participation in 2025
Participation in governance also saw a decline in 2025 as engagement hit new lows. The absence of incentives and airdrops resulted in some DAOs struggling to attract sufficient voters. In certain cases, voting was overtaken by major stakeholders to sway outcomes. Lido Finance adopted a dual governance approach, leading to increased engagement.
While Uniswap and Arbitrum boasted the highest levels of DAO participation, their communities still experienced declines in the past year.
Consequently, many projects shifted towards smaller, focused groups with less frequent governance meetings. Issues such as token burns and fee adjustments dominated discussions in 2025, tied to profit-sharing and token support.
Despite proposals for DAO LLC registration formats in certain jurisdictions, DAO ownership remains a legal gray area, introducing uncertainties regarding protocol ownership, brand rights, and entitlement to payouts, as evidenced in the Aave DAO versus Aave Labs case. DAO tokens may evolve from pure governance tools to incorporating elements of ownership or revenue sharing, as token holders demand compensation.
