The Role of Delegates in DAOs: Lessons from Traditional Corporate Governance
I want to share some reflections as a conclusion after following this debate, drawing on the experience of corporate governance in traditional companies, which I think can shed light on what we are really discussing here.
Leadership versus governance: context matters
In the corporate world, there is an important distinction that is often overlooked in discussions about DAOs: not all projects need the same type of governance. Mature companies managing established businesses with stable models and limited competitive pressure are the ones that benefit most from robust governance structures oriented toward safeguarding good practices. In that context, control and oversight mechanisms add real value.
However, projects in a growth phase operating in highly competitive environments need above all clear strategic leadership. Aave fits better in this second category. The leadership Stani has historically exercised, and the recent momentum of the Aave Will Win framework, respond precisely to that need. In this context, adding layers of delegated governance may generate more friction than value.
The real risk: value capture by management
One of the most well-documented structural problems in companies managed by executive teams without significant capital participation is that management tends to capture a disproportionate share of the value created, rather than aligning it with shareholders. It is one of the reasons why founder-led companies or those with strong anchor shareholders have historically tended to create more long-term value.
In Aave’s case, there is a relevant differentiating element: the recent protocol design has explicitly oriented value creation toward the token. If leadership is genuinely aligned with token holders, the capture problem is naturally mitigated, which reduces the need for external oversight mechanisms.
What can a delegate actually contribute? The uncomfortable question
Being honest, it is difficult to argue that a generic delegate can add real strategic value to a protocol of this complexity. In the corporate world, when someone external is brought onto a board, it is usually for a specific reason: sector experience, regulatory knowledge, network relationships, or concrete financial expertise. The criterion is verifiable merit, not participation itself.
In the usual definition of delegate in DAOs, that criterion does not seem to be present. Selection is not based on expertise; it is based, at best, on activity and forum visibility.
The function that does make sense, and that has a clear parallel in traditional corporate governance, is that of the minority shareholder advocate. Independent directors in listed companies exist primarily to ensure that management and large shareholders do not act to the detriment of minority holders. That role can have value in a DAO: someone who verifies the correct functioning of the protocol and protects the interests of small token holders who are underrepresented and who, in many cases, lack the capacity or information to vote in an informed way.
In practice, this turns the delegate into a kind of analyst or auditor who helps other token holders make informed voting decisions. A useful role, but a narrow one.
The structural agency problem
Here is the core of the problem: if remuneration comes from the DAO itself, the delegate structurally becomes an extension of management, not an independent counterweight. It is the same problem that affects independent directors nominated and paid by the company they are supposed to supervise. Formal independence does not guarantee real independence.
The model that does have internal coherence is the opposite: large shareholders or token holders themselves remunerating the people who closely follow the protocol’s functioning and defend their interests. In many cases, for an institutional fund manager, the analyst already covering the project has the criteria to weigh in on votes. No additional layer paid by the DAO is needed; what is needed is for each large holder to activate the representation they already have.
Open Source Capitalism and the real nature of DAOs
One of the most precise definitions I have encountered for these structures is Open Source Capitalism. DAOs are organizations that should function as collaboratively maintained markets. That nature has direct implications for how to think about governance.
It is neither realistic nor probably desirable for everyone to vote on everything. It makes more sense for strategically relevant decisions to be broadly consulted, while many operational decisions are delegated by default to management or to large shareholders with real judgment and genuine interest. What matters is that there is transparency about who decides and why.
There is also a legal dimension that cannot be ignored: demonstrating decentralization allows these projects to operate under more favorable regulatory conditions, which in many cases forms part of their competitive advantage. In that context, delegates have sometimes functioned as a mechanism to distribute legal risk toward willing third parties in exchange for remuneration, whose real function was in many cases to approve whatever management proposed. That is not governance; it is cosmetic decentralization.
Transparency as a genuine advantage
What does distinguish DAOs from traditional companies, and where their potential for genuine governance lies, is structural transparency. All votes are public, all treasury movements are auditable, all arguments are on the record. That transparency, properly leveraged, forces greater meritocracy and makes it harder to sustain behaviors that in a traditional company might remain hidden for years.
Conclusion: we are in an experimental phase, and that is normal
DAOs have demonstrated the ability to lead exponential growth in early stages. The maturation of their governance models is probably the stage that requires the most time, especially in solid projects that already generate real revenue. It is to be expected that these debates emerge precisely in projects that have reached a certain scale.
The market will show which governance structures produce better long-term results. There is probably no single answer, and different types of projects will find different equilibria. What does seem clear is that building from accumulated experience, including mistakes, is the only realistic path toward more optimal governance.