DAOs 2.0: Context-based, Automated, Tokenomic-driven

“May your DAO live forever” - King Leonidas
But did it really live at all?

There is no use in making DAOs unstoppable if they stop organizations from being effective. Although some projects, like Lido and Aave, have navigated these challenges with strong leadership, the majority hit headwinds as soon as they launch a token and start truly decentralizing.

Many projects avoid becoming DAOs altogether, while others become DAOs in name only, keeping centralized control over their protocols and assets.The core issues at a technological level lie in inflexible legacy tooling that forces tradeoffs in velocity for decentralization.

DAOs have been tied to a rigid vanilla delegate token-based voting model, with few ways to adapt governance to their needs. But every organization is different, and their governance must evolve over time to reach their goals.To overcome these challenges, a new approach is underway, and 2025 will be the year of DAOs 2.0: a new paradigm unleashing the full potential of DAOs to be effective while actually increasing decentralization and autonomy.

The main three areas driving this new era for DAOs:

1. Context-based governance
2. Automation & AI
3. Tokenomic-driven

Context-Based Governance

Like players moving chess pieces on a board, organizations need to constantly move their resources, stakeholders, and activities to reach their goals. Each decision has unique considerations.Monolithic frameworks have been limiting governance to a single governance model: token-based voting. But there’s a world of options beyond one-size-fits-all governance. Modular governance tooling allows organizations to tailor processes within a single onchain deployment. Instead of making every decision with a referendum, a wide range of governance methodologies can be implemented within a single organization. Decisions can pass through multiple stages before execution, such as optimistic proposals with a veto and multi-threshold approvals by trusted bodies.Effective decision-making requires input from people with context, expertise, and skin in the game. Modular tooling empowers organizations to involve the right stakeholders at the right stages of the decision-making process. The end result is better and faster decision making with proper checks and balances.

Automation & AI

DAOs need to reduce governance and operational overhead to succeed. DAOs were meant to center automation and push humans to the edges.But DAOs bound to a single governance model have relied too heavily on humans to bridge the gaps, whether to build consensus before a proposal or to intervene when things go wrong.

Ironically, many critiques of DAOs stem from excessive reliance on human intervention in token voting—politicking, popularity contests, conflicts of interest, and errors.The need for extensive discussion amongst humans to pass a wide range of proposals has hampered effective decision making. The current incentives are designed for humans in positions of power to avoid including automation. But by segmenting decisions into specific and narrow processes, organizations can reduce the need for interdependencies and nuance, making decisions more straightforward with clear tradeoffs.

With narrower inputs, it’s not only easier for humans to make decisions, but to integrate automation into decision-making. Thresholds and triggers can advance, pause, or block processes with minimal human involvement.AI agents can supercharge this automation.

By introducing AI at appropriate decision-making stages, DAOs can leverage their ability to process data and identify optimal outcomes. While AI is unlikely to replace human governance entirely at this stage, narrowing the scope of decisions makes AI a practical and valuable tool to reduce governance overhead and maximize efficiency.

The more automated the process, the less overhead DAOs face. Automation reduces the cognitive and resource load on humans, minimizes errors, and moves risk away from human actors. Automated workflows can adapt over time as conditions change—or become immutable as they ossify. The end result is DAOs that are more efficient, secure, all the while becoming more autonomous and thus resilient.

Tokenomic-Driven

Tokens give onchain organizations a huge and relatively untapped competitive advantage over traditional ones. Yet, most governance tokens lack real onchain power over protocols or capital flows, creating a disconnect between governance and value accrual.Tokens and governance are intrinsically linked.

Token distribution and liquidity affect governance dynamics, while governance decisions, in turn, determine how value is allocated and how it accrues to the token. When projects fail to consider these interdependencies, they risk misaligning incentives, discouraging participation, and stifling growth.

By integrating tokenomics into their governance design, organisations reap the benefits of incentive alignment –meaningful participation, value accrual, and growth flywheels.Tokenomic mechanisms can help reward loyalty and participation:

• Token lockers with power over financial flows turns governance tokens into productive assets, improving value accrual and introducing liquidity sinks.
• Balancing the “carrot” of increased voting power over time with the “stick” of withdrawal delays improves loyalty and decreases principal-agent-problems of the delegate model.
• Rewarding participation and contributions to the network offsets both financial and human capital costs for those involved.

In the best-case scenario, sound tokenomics creates a positive feedback loop. Governance participation leads to rewards, which drive stronger engagement and better decisions. This, in turn, fosters ecosystem growth, enhancing the token’s value and creating a cycle of sustainable development.

Governance must meet organizations where they are—not just where they aspire to be. The ability for DAOs to reach their current goals and adapt over time is what will make them unstoppable, future-proof, and most importantly effective.

By adopting context-based governance, leveraging automation and AI, and integrating tokenomics into governance design, DAOs will transform into organizations more powerful and effective than their traditional counterparts.

This is the direction we’ve been building towards and we look forward to DAOs 2.0 taking root in 2025.Let’s build DAOs that don’t just live forever – let’s build DAOs that succeed today.