DAOs in 2025: The Revolution That’s Just Getting Started

Decentralized Autonomous Organizations aren't just surviving—they're evolving faster than regulators can say 'compliance risk.'

Why DAOs Are Eating Traditional Governance

Forget corporate boardrooms. DAOs now manage everything from billion-dollar DeFi protocols to viral meme projects—with blockchain transparency cutting through bureaucratic bloat. Treasury management happens on-chain, votes execute automatically, and yes, the occasional rogue proposal still drains funds in spectacular fashion.

The $8.2B Reality Check

Total value locked in DAOs hit record highs this quarter despite crypto winter's chill. But here's the kicker: less than 20% of active DAOs survive two years. The ones that thrive? Those figuring out how to merge decentralized ethos with real-world legal wrappers—because even anarcho-capitalists need LLCs sometimes.

Betting Against the Skeptics

Wall Street analysts keep writing DAO obituaries between martini lunches. Meanwhile, the tech keeps advancing: zk-proofs for private voting, AI-powered proposal analysis, and cross-chain governance are turning theoretical weaknesses into solved problems. The future isn't corporate hierarchies—it's fluid, global talent pools coordinating without middlemen taking their usual 30% vig.

From Political Idealism to Tokenized Theater

Originally celebrated as a way to “give a voice to the voiceless,” DAOs have often been criticized for being a legal and financial gray area. By issuing “governance tokens,” many projects found a way to circumvent securities laws, without delivering the accountability or utility those tokens promised.

Today, CoinMarketCap lists 273 DAO tokens with a combined market cap of over $21 billion. But those numbers are misleading. Nearly 50% of that value is concentrated in just three tokens—Uniswap (UNI), Aave (AAVE), and Bittensor (TAO). At the other end of the spectrum, 63 DAO tokens are worth less than $1 million, effectively dead-on-chain.

Take Mango Markets for example. It was once a bustling decentralized exchange that notched more than 1,000 governance proposals. It now has zero activity after the platform shut down in February, but $19 million worth of MNGO tokens still exist – completely useless.

A Broken Model?

DAOs were often criticized for “governance theater”—in other words, for appearing to be decentralized and governed by the crowd, but actually being controlled or dictated by a small number of people.

DAOs required large numbers of people to participate in order to be effective. But numbers were often lacking, leading to disillusionment. “To vote on anything, you need a quorum. But to reach quorum, you need incentives. And when you start incentivizing voting, you get mercenary participation. Everything works against itself from the start,” House said.

Joshua Tan is executive director of Metagov, a research group focused on self-governance.

“There are reasonable questions about the value DAOs are actually providing,” Tan, co-author of a recent report on DAO M&A, told CoinDesk. “Grant systems are often inefficient. Governance can be a mess. Still, this doesn’t mean DAOs are done. It just means they’re changing.”

In Tan’s view, the struggles of Jupiter and Yuga Labs are symptomatic of deeper systemic issues. But governance failures at particular projects shouldn’t be confused with a failure of the DAO concept itself.

“If you compare billion-dollar DAOs to billion-dollar public companies, sure, DAOs look inefficient,” he said. “But so do most corporate boards. Governance is a cost center—not a profit center. That doesn’t mean it’s dispensable.”

Not Dead—But Mutating

Far from writing off the concept, Tan and House both see a bright future for DAOs—albeit one that looks radically different. House points to futarchy, a governance model where decisions are made based on prediction markets, as a promising evolution. MetaDAO is actively building a fundraising platform rooted in that vision.

“We’re solving issues with liquidity, decision making and ownership,” House said. “The goal is to build the organizations of the future from the start.”

Tan is focused on infrastructure—developing standards for DAO mergers and acquisitions (M&A), governance tooling, and valuation metrics through Metagov and DAOstar.

“We need to build muscles that TradFi has had for decades,” Tan said. “That includes M&A workflows, legal frameworks, and robust metrics—not just relying on TVL.”

The regulatory gray zone is another ongoing headwind. While some jurisdictions like Wyoming, Utah, and the Cayman Islands have built legal wrappers for DAOs, others lag behind. And even where structures exist, they're often expensive and impractical for small teams.

“We’re still seeing two to three DAO registrations per week in the Caymans,” Tan noted. “These are $50K setups. The fact that people are paying that much tells you DAOs still offer unique advantages.”

DAO Consolidation is Coming

Both experts agree: a shakeout is inevitable.

“We’ll probably end up with 50 to 100 vibrant DAOs,” Tan said. “Just like after the ICO boom, most will disappear. And that’s fine.”

What remains will be leaner, better governed, and—hopefully—less performative.

Tan sees a future where DAOs don’t disappear, but merge into broader organizational strategies, particularly in the merging of TradFi and DeFi. DAOs could become tools in the corporate stack—used when necessary, ignored when not.

“The underlying tech, smart contracts, is here to stay,” he said. “Not everyone wants the ‘movement’ version of DAOs. But the infrastructure LAYER is decentralized. It’s modular. Companies will choose what fits.”

What Happens Now?

A good governance system is invisible when it works—and painfully obvious when it doesn’t. That truism now haunts the DAO ecosystem.

“The dream of community-led protocols isn't dead,” said House. “But we’re still discovering the right way to build it. And failure is part of that.”

“Governance can’t be optional. Without it, you get chaos. But that doesn’t mean the system we’ve built so far is the right one,” Tan said.

It remains to be seen whether more DAOs will follow Yuga and Jupiter in shutting down community governance, but one thing is clear. DAOs may be struggling, but they aren’t dead, for now.