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By
MIDAO
January 15, 2025
As we enter 2025, the DAO ecosystem stands at a crossroads. While recent data from platforms like DeepDAO shows declining activity in traditional DAO metrics, innovative builders are pioneering new approaches that could define the next wave of decentralized organizations. Through insights from experienced DAO builders Travis and Sam of DAOhaus at Just DAO It podcast hosted by Adam Miller, we explore where the space is headed and what opportunities lie ahead.
Recent data suggests a significant drop in both new DAO formation and governance activity. However, as Travis, a core DAOhaus contributor since 2021, explains, this might not tell the whole story: "I think a lot of people are calling themselves DAOs but aren't really doing things on-chain. So, a lot of the activity we see isn't tracked with transactions."
This observation points to a broader trend: the evolution of what we consider a DAO. While on-chain activity might be down, innovation in the space continues, particularly in areas that traditional metrics might not capture.
According to industry veterans, DAOs have gone through several distinct phases:
As Sam, who has been building DAO tooling since 2017, notes: "With all this new tooling, it's really complex. People are still just trying to get up to speed with it. We need DAO consultants who can put all these Legos together and actually make these organizations work."
One of the most promising developments is the integration of AI into DAO governance. Sam highlights this opportunity: "One area I'm excited about is this 'agent meta'—this new push toward AI agents that can make sense of on-chain data, analyze what's going on in DAOs and proposals, help people make better decisions in the DAO."
This trend addresses a crucial pain point: "Right now, there's so much going on in DAOs that it's hard to keep up. People burn out. It's hard to participate in governance when you don't know what's happening."
A significant shift is occurring toward smaller, more focused DAOs with specific missions and lifespans. Sam explains their approach: "Where I'm playing right now is in this space of smaller DAOs—less of these large DAOs that live for a long time... Instead, I'm focused on these small, short-lived raids—DAOs that can spin up quickly, raise funds, do something meaningful, and then dissolve."
The integration of DAO governance with social platforms represents another major trend. Travis describes their work with Farcastles: "We started thinking: How can we take the features and functionalities that we know have the potential for human coordination—and put them into a social feed?"
This approach addresses a key user experience challenge: "People are being pulled out of their actual workflows to go interact with a DAO. For example: They're in the middle of something important—but they have to go to another app just to make a decision or vote on something."
A recurring theme is the need to prioritize purpose over technical capabilities. As Travis emphasizes: "I believe what's missing is purpose. A lot of organizations are coming together without a guiding vision or core values. And that makes everything else difficult."
He adds: "We tend to focus on the tools first. It's like, We want to be this type of organization, so we need to use these tools. But instead, we should be figuring out the process, the vision, and the purpose of the organization first—and then using the tools to support that."
The funding landscape for DAO tooling remains challenging. Travis explains: "Nobody's looking at us and thinking, 'Yeah, what they're building is going to be worth a billion dollars opportunity anytime soon.' And that puts us in a really difficult place when it comes to funding."
This challenge is compounded by the public goods nature of many DAO tools. As Sam notes: "We're adamant about something: You should never have to pay to use DAOhaus software. Like—fork it, launch a DAO, it's free, whatever—you know? And that makes it harder to find revenue streams."
Travis argues that DAOs need to forge their own path: "One of the biggest problems with why so many DAOs have failed is that we're trying to emulate existing startups and existing corporations... Blockchain technology isn't going to fix those models. Instead, we need to figure out what we do well and lean into that."
The ecosystem is seeing a divergence between two types of DAOs:
As Adam Miller says, “The evolutionary DAOs are the ones saying, Look, we’re just trying to build a successful business. We want to protect ourselves within the current legal system. We want to be more decentralized and autonomous than anything that came before—but we still need to operate within existing legal frameworks. And honestly—that’s probably most DAOs. But then there are the revolutionary DAOs, which are saying, Hey, we’re trying to build a system that literally lets you avoid government interference.Just like Bitcoin is censorship-resistant money, DAOs can be censorship-resistant organizations—organizations that cannot be stopped.”
The trend toward social-first DAOs will likely accelerate. Travis envisions: "Group chats with bank accounts and governance. If Facebook Groups weren't controlled by one person, but instead governed collectively and had a shared treasury—that would actually be way more useful."
The future may favor smaller, more focused DAOs over large, general-purpose ones. These organizations can "spin up quickly, form a team, raise funds, execute on their goal, share revenue transparently, RageQuit and dissolve when the work is done."
The integration of AI agents will likely become crucial for making DAO participation more manageable and informed, helping participants navigate complex governance decisions and track organizational activities.
The DAO space is evolving beyond its initial focus on large, permanent organizations toward more flexible, purpose-driven structures. With the integration of AI, social platforms, and improved governance tools, DAOs are becoming more accessible and practical for specific use cases.
As Travis concludes: "The real potential is in integrations, composability, understanding how flexible this tech is, and knowing that even if there isn't an existing tool for something, we can still build it using the existing infrastructure. We can literally build whatever our hearts desire."
For builders and investors looking to participate in this evolution, the key is to focus on clear purpose, practical use cases, and solutions that make DAO participation more natural and integrated with users' existing workflows. The future of DAOs lies not in replicating traditional organizational structures, but in creating new models of coordination that leverage the unique capabilities of blockchain technology.
