Contact Usinfo@lampros.tech

Why Governance Protocols Still Matter in 2025

As of mid-2025, DAO treasuries tracked by DeepDAO exceed USD $25 billion, distributed across nearly 2,000 treasury accounts spanning liquid, vesting, and protocol funds.

Governance protocols now decide more than voting outcomes; they determine which upgrades are implemented, how treasuries are allocated, and how systemic risks are managed across DeFi, rollups, and app-chains.

Their design has become central to whether protocols adapt and scale, or stagnate.

Key challenges - centralization, participation gaps, and liquidity risks

• Centralized Voting Power: Power is concentrated at the top, posing a risk to decentralized governance.
• Low Participation: Member apathy leads to low voting rates, leaving protocols vulnerable.
• Liquid Treasuries: Reliance on native tokens instead of diversified assets creates fragility, threatening growth and governance.

In this environment, governance protocols serve as the coordination backbone of Web3. They provide execution guarantees, transparency, and legitimacy that decentralized systems cannot operate without.

This blog highlights which governance protocols are setting the standard in 2025, where they fall short, and what their impact means for builders, DAOs, and investors shaping the next phase of Web3.

It also evaluates the leading protocols and distills the key insights that define governance in 2025.

Let’s get started.

Governance Protocols in 2025: The Landscape

The governance layer in Web3 is evolving rapidly. In 2025, a clearer picture is emerging of what it takes for governance protocols to be resilient, inclusive, and effective.

Here are the 5 dimensions that define resilient, inclusive, and effective governance in 2025.

Treasury Scale & DAO asset Composition

DAO treasuries have expanded both in size and complexity.

A large-scale analysis published on arXiv found that more than 13,000 DAOs collectively managed around USD $24.5 billion, with 11.1 million governance token holders engaged.

Different methodologies produce slightly different totals, but the trend is clear:

DAO treasuries now exceed $24 - 25 billion globally, with governance protocols responsible for deploying these funds responsibly and transparently.

Participation, Decentralisation & Voting Power

The scale of assets contrasts sharply with participation levels. Governance remains concentrated, with token distribution often skewed toward large holders.

The arXiv study highlights high Gini coefficients across many DAOs, showing that voting power is often centralized in the hands of a few.

Participation is still a weak point. According to CoinLaw’s DAO statistics, average voter turnout hovers around ~17%, with leading DAOs occasionally exceeding 20–25% on major proposals.

While this marks progress compared to earlier years, most DAOs remain well below levels that would ensure broad legitimacy.

Multi-Chain Governance & Tooling Advances

By 2025, governance will no longer be confined to single chains. Major DAOs like Uniswap and Aave coordinate across Ethereum, multiple L2s, and app-chains.

This makes governance protocols responsible for multi-domain execution, a shift that has raised the stakes for reliability and verifiability.

Governance tooling has matured to meet this complexity:

• Snapshot has added zk-verifiable voting and cross-chain proposals, ensuring signaling is more trustworthy.
• Tally has expanded delegate dashboards and execution pipelines, integrating more tightly with Safe-based treasuries.
• Agora has become the interface of choice for large DAOs seeking delegate transparency and historical analytics.
• OpenZeppelin Governor & Zodiac modules continue to provide modular, audited frameworks that bridge decisions with treasury execution.

This consolidation signals that governance protocols are moving from experimentation to infrastructure-grade standards.

Governance Complexity & Systemic Risk

With bigger treasuries and multi-chain operations come higher risks:

• Large token holders or delegates capture governance.
• Liquidity risk, when treasuries remain over-weighted in native tokens.
• Coordination costs for proposals spanning multiple chains or execution paths.
• Execution delays and vulnerabilities in governance contracts or cross-chain messaging.

Evaluating DAO sustainability and longevity through on-chain governance metrics.

Emerging Expectations for Protocol Design

As DAO treasuries scale and multi-chain operations grow more complex, token-voting alone is no longer sufficient. Stakeholders now expect governance protocols to deliver accountability, inclusivity, and verifiable execution.

These pressures are shaping what stakeholders expect from governance protocols:

• Greater transparency and auditability of proposals, treasury allocations, and delegate performance.
• Hybrid models blending token voting with reputation, identity, or council-based structures.
• Lower barriers to participation through better UX, delegation systems, and reduced proposal thresholds.
• Verifiable execution guarantees, especially in multi-chain and treasury-linked contexts.

In 2025, governance protocols are being tested at unprecedented scale: billions in treasuries, cross-chain coordination, and legitimacy challenges.

The protocols setting the standard are not those with the largest war chests, but those that combine scale with verifiable execution, higher participation, and adaptable governance design.

To see which protocols truly set the standard, we need clear criteria for evaluating governance in 2025 and that’s exactly what the next section outlines.

How We Evaluate Governance Protocols in 2025

Not all governance protocols are created equal. Some now manage billions in treasuries with verifiable execution, while others remain limited to signaling.

Evaluating governance isn’t just about tracking treasury size or token prices. Builders, DAOs, and investors need clear criteria to judge whether a governance system is durable or fragile.

Based on research and industry best practices, here are five dimensions you can use to evaluate governance protocols in 2025:

Decentralisation - avoiding capture by large token holders

Power must be distributed widely enough to avoid capture. When a handful of wallets or delegates control outcomes, legitimacy collapses.

What to measure: Token distribution (Gini coefficients), share of votes by top delegates, and concentration of active vs inactive holders.

Example: Research covering 13,000 DAOs found that in many cases, fewer than 10% of holders determine most outcomes, highlighting the risks of centralisation.

Participation & Inclusivity - measuring turnout and proposal diversity

Active participation isn't just a metric; it's the foundation for credible governance. When turnout drops, it signals more than just disinterest. It exposes friction and barriers that protocols can’t afford to ignore tomorrow.

What to measure: voter turnout rates, delegate participation, proposal submission diversity.

Example: According to CoinLaw, as mentioned earlier, average DAO turnout hovers around ~17%, with only a few protocols like Optimism occasionally crossing 20–25% in major votes.

Voting Efficiency & Mechanism - from submission to execution

Efficiency determines how smoothly ideas move from submission → deliberation → execution. Slow or unclear voting systems stall upgrades, create governance fatigue, and increase risks from proposal spam.

Metrics to watch: Proposal latency (time from submission to enactment), rejection/approval ratios, quorum thresholds, and execution success rates.

Example: Uniswap’s months-long “fee switch” debates illustrate how inefficiencies can stall critical decisions despite strong delegate networks.

Transparency - tracking proposals, delegates, and treasury flows

Governance only works if actions can be tracked and audited. Without transparency, stakeholders cannot hold decision-makers accountable.

What to measure: Public access to proposal histories, voting records, delegate activity, and treasury reports.

Example: Platforms like Tally and Agora now make delegate analytics and treasury flows visible in real time, setting new expectations for transparency.

Security & Resilience - safeguards against sybil attacks and capture

Governance thrives on built-in resilience and transparent safeguards. Strong systems build safeguards against both malicious proposals and sybil-style capture.

What to measure: Sybil resistance mechanisms, incident response capacity, timelocks, and multi-sig protections for treasuries.

Example: Arbitrum and Optimism use time-locked execution for large treasury disbursements, balancing speed with a security buffer against malicious activity.

Together, these five dimensions provide a framework to evaluate whether a governance protocol can scale sustainably.

They move the analysis beyond treasury size or token price to the real markers of resilience: distribution, participation, efficiency, transparency, and security.

Numbers bring these criteria to life. Before diving into individual protocols, the next section uses treasury sizes, participation rates, and delegate activity to show how the leading governance systems actually measure up in practice.

Governance Snapshot: Metrics at a Glance

Numbers reveal what narratives can hide. If bicameralism, RWA allocations, or delegate ecosystems explain how governance is evolving, snapshots show who is executing on them today.

The table below brings together the most important signals: treasury size, participation rates, delegate activity, and multi-chain scope.

These reveal which protocols are scaling governance, which are experimenting, and which are struggling with legitimacy.

All figures are drawn from DeepDAO, TokenTerminal, Tally, and official protocol governance sources, last updated in September 2025.

Values fluctuate with treasury activity and participation, so these snapshots should be read as directional signals.

Governance Protocols Snapshot (2025)

Key Takeaways from the Snapshot

• Treasury concentration among leading DAOs: MakerDAO remains the largest RWA allocator; Arbitrum the largest ecosystem fund.
• Participation gaps: Voter turnout in most DAOs rarely passes 15%, concentrating decision-making power in the hands of a small, active group.
• Delegates: Although protocols such as Uniswap, Aave, and Arbitrum report tens or hundreds of thousands of delegated addresses, real governance power is often concentrated in a much smaller subset of active delegates. This discrepancy underscores the persistent challenge of transforming widespread delegation into inclusive, decentralized decision-making.
• New governance models testing legitimacy beyond tokens: Optimism (bicameral) and Starknet (hybrid councils) test legitimacy beyond token voting.

The snapshot shows that treasury size alone does not equal resilience. What matters is how protocols combine participation, accountability, and verifiable execution.

Numbers give us a snapshot, but not the full story.

To see how these governance protocols actually operate where they excel, where they fall short, and what that means for DAOs, builders, investors, and contributors, we now break them down by category.

While the snapshot gives us directional signals, it doesn’t capture the full story.

To understand how these governance protocols actually operate where they excel, where they fall short, and what that means for DAOs, builders, and investors, we now turn to detailed deep dives.

Protocol Deep Dives

Not every governance protocol serves the same purpose, and comparing them side by side without context can be misleading.

To bring clarity, we’ve grouped them into four functional categories that reflect how DAOs actually operate in 2025:

• Treasury & RWA Governors - Protocols like MakerDAO and Compound manage billions in assets and set the bar for capital allocation.
• Delegate-Centric Protocols - DAOs like Uniswap and Aave rely heavily on professional delegates to scale decision-making.
• Emerging Governance Models - Optimism, Arbitrum, Starknet, and NounsDAO are testing bicameral systems, hybrid councils, and cultural governance.

Each category represents a different layer of Web3 governance, from institutional asset management to experimental legitimacy models.

Numbers show direction, but governance is about how protocols handle power, participation, and execution.

Below, we evaluate leading governance systems against the five dimensions: decentralisation, participation, efficiency, transparency, and security.

To move beyond surface metrics, we break governance protocols into categories that reveal how they truly function in practice.

Treasury & RWA Governors

Treasuries are no longer just savings accounts they are active capital allocators.

This category highlights DAOs like MakerDAO and Compound, which define how governance systems manage assets at scale.

We will see how these protocols balance decentralisation, participation, efficiency, transparency, and security when billions are at stake.

MakerDAO / Sky - Institutional-Scale Allocator

MakerDAO (rebranded Sky) has grown beyond stablecoin issuance into one of the largest allocators of real-world assets (RWAs).

Its treasury strategy, especially through U.S. Treasuries, positions it as the closest DAO equivalent to an institutional asset manager.

• Core Metrics:
  • ≈ USD 700M treasury (DeepDAO as per Sep 26, 2025)
  • ≈ USD 1.25B deployed into tokenized U.S. Treasuries under the MIP65 Monetalis framework
  • Revenues mix: CDPs + RWA yields.
• Evaluation:
  • Decentralisation: Governance often sees significant influence from a small group of large delegates, making leadership appear top-heavy despite decentralization goals.
  • Participation: Higher turnout on RWA proposals vs routine votes (~10–15%).
  • Efficiency: Off-chain custodians create delays; execution less agile than fully on-chain models.
  • Transparency: Strong - forums, MIP docs, financial disclosures.
  • Security: Reliant on custodians → introduces off-chain trust risk.
• Takeaway: Maker shows DAOs can scale to institutional asset management, but decentralisation is constrained by off-chain dependencies.

Compound v3 – Lean, Parameter-Driven Governance

Compound remains focused on lending markets, maintaining a narrow governance model centered on parameter updates rather than diversification into RWAs. It prioritizes simplicity, efficiency, and predictable execution cycles.

• Core Metrics:
  • ≈ USD 36.9M liquid treasury excluding COMP (DeepDAO).
  • Uses Governor Bravo contracts; proposals are mostly parameter updates.
• Evaluation:
  • Decentralisation: Open delegation, but few active delegates dominate.
  • Participation: Modest, consistent turnout; majority of holders passive.
  • Efficiency: High, predictable proposal cycles, parameter-driven scope.
  • Transparency: Good, governance archives and delegate dashboards.
  • Security: Bravo safeguards (quorums, cancellation) protect against flash governance.
• Takeaway: Compound proves governance can be credible without a massive treasury, but its narrow focus raises resilience questions.

Delegate - Centric Protocols

Tools are the rails that turn votes into outcomes. Without them, DAO decisions risk remaining symbolic.

This section highlights protocols like Uniswap and Aave, which drive decentralized governance with real-world impact through streamlined voting and execution.

Delegates make governance scalable but risk power capture.

Uniswap DAO - Scale with Latency

With the largest treasury in DeFi (~USD 3.5B), Uniswap DAO shows the power of scale. However, drawn-out debates like the fee switch reveal governance latency risks, even with strong delegate ecosystems.

• Evaluation:
  • Decentralisation: 48K of delegates, but few dominate.
  • Participation: Average turnout 10–15%.
  • Efficiency: Weak, fee switch debate lasted months.
  • Transparency: Strong, Tally dashboards, forums.
  • Security: Timelocks protect execution; delegate capture remains a risk.
• Takeaway: Scale achieved, but agility suffers under delegate bottlenecks.

Aave DAO - Multi-Chain Governance

Aave’s DAO treasury (~USD 125M) spans Ethereum, Polygon, Arbitrum, and Optimism. Its governance model relies on delegates and risk stewards to dynamically manage multi-chain lending and liquidity risks.

• Evaluation:
  • Decentralisation: Mix of delegates + specialized Risk Stewards.
  • Participation: Consistent 10–15% turnout.
  • Efficiency: Higher, stewards reduce bottlenecks.
  • Transparency: Governance forums, dashboards.
  • Security: Multi-chain execution increases risk but timelocks mitigate.
• Takeaway: Aave shows how structured delegate roles can scale risk governance.

Emerging Governance Models

Delegates are now the backbone of many large DAOs. They make governance scalable but also concentrate power.

Here, we examine how Uniswap and Aave balance efficiency, legitimacy, and risk in systems heavily reliant on professional delegates.

Protocols here test legitimacy beyond token voting.

Optimism Collective - Bicameral Model

Optimism’s governance uniquely balances power through a bicameral system: the Token House, where voting power is based on OP token holdings, and the Citizens’ House, a democratic chamber granting one vote per verified participant.

This dual model combines token-weighted influence with identity-based participation to ensure more inclusive, accountable decision-making.

It protects against governance capture and drives sustainable growth for the Optimism Superchain ecosystem, marking an innovative evolution in decentralized governance.

Its RetroPGF program allocates millions in OP tokens to public goods, making it a live experiment in balancing economic power with legitimacy.

• Evaluation:
  • Decentralisation: Broader legitimacy via identity + tokens.
  • Participation: Strong in RetroPGF (30M OP distributed).
  • Efficiency: Coordination between houses can slow processes.
  • Transparency: Public RetroPGF records, open forums.
  • Security: Reduced capture risk through dual-house structure.
• Takeaway: A blueprint for balancing token power with community legitimacy.

Arbitrum DAO - Billion-Dollar Treasury Manager

Arbitrum DAO oversees one of the largest treasuries in Web3 (≈ USD 1.3 - 1.8B, DeepDAO).

Its token-voting governance and timelocked execution shape billion-dollar grant programs like STEP, turning governance into a growth engine for its L2 ecosystem.

• Evaluation:
  • Decentralisation: Token-voting with delegates; concentration risk.
  • Participation: Low, <10% turnout.
  • Efficiency: Ecosystem grants flow steadily but face bottlenecks.
  • Transparency: Forums and Agora dashboards.
  • Security: Timelocks protect large disbursements.
• Takeaway: Massive scale, but turnout and concentration challenge resilience.

Starknet - Hybrid Council Governance

Starknet launched in 2025, Starknet combines token-holder voting with a technical council for oversight.

This hybrid model is designed to manage agility in a highly complex, zk-based ecosystem while safeguarding legitimacy.

• Evaluation:
  • Decentralisation: Hybrid, token + council balance.
  • Participation: Early stage; still maturing.
  • Efficiency: Council accelerates technical upgrades.
  • Transparency: Public disclosures + governance forum.
  • Security: Council oversight strengthens resilience.
• Takeaway: Hybrid model suits technically complex ecosystems.

NounsDAO - Culture as Governance

NounsDAO uses daily NFT auctions to continuously onboard members, where 1 Noun equals 1 vote.

It's fully on-chain treasury and cultural brand-building show how identity and community can drive sustainable governance beyond financial incentives.

• Evaluation:
  • Decentralisation: Limited, Noun ownership costly.
  • Participation: High among holders.
  • Efficiency: Simple, direct voting → fast execution.
  • Transparency: Fully on-chain, verifiable.
  • Security: Treasury tied directly to governance, minimal buffers.
• Takeaway: Cultural legitimacy sustains governance, but scalability and inclusivity are limited.

Key Takeaways from the Governance Landscape

The snapshot and deep dives make one thing clear: governance in 2025 is no longer experimental but infrastructure.

• Why treasury size alone does not equal resilience: Treasury power is concentrated, MakerDAO anchors RWAs at an institutional scale, while Arbitrum manages one of the largest ecosystem treasuries.
• How participation and delegates shape legitimacy: Participation remains shallow. Across leading DAOs, turnout rarely crosses 15%, leaving governance concentrated in the hands of delegates or whales.
• How Delegates drive decision quality but also risk concentration: Systems like Aave’s risk stewards or Uniswap’s delegate networks improve process maturity but risk capture.
• Why token voting is no longer the sole path to legitimacy: Legitimacy is diversifying, Optimism’s bicameral houses, Starknet’s hybrid councils, and NounsDAO’s cultural auctions prove token voting is no longer the sole model for coordination.

Treasury scale alone does not guarantee resilience.

The protocols setting the standard in 2025 are those combining participation, accountable delegates, and verifiable execution. Others risk stagnation or worse, governance becoming a liability.

The snapshot and deep dives make one thing clear: governance in 2025 is no longer experimental but infrastructure.

The real question is how these systems will evolve under the pressures of AI, regulation, and cross-chain coordination.

Conclusion: Governance as Web3’s Coordination Layer

In 2025, governance is no longer a symbolic process running in the background.

In 2025, governance has become the vital coordination layer of Web3, powering billions in DAO treasuries, guiding protocol upgrades, and sustaining legitimacy across diverse ecosystems.

The landscape is evolving with innovative governance models that balance institutional allocation, delegate expertise, and broader community legitimacy, signaling a new era where decisions shape the future of decentralized networks.

Lessons for builders, DAOs, and investors

The analysis shows clear signals:

• Treasury governors like MakerDAO and Compound demonstrate that DAOs can operate as institutional allocators, managing everything from RWAs to credit markets.
• Delegate-centric DAOs like Uniswap and Aave reveal both the power and the risks of concentrated professional decision-making.
• New governance models from Optimism’s bicameral houses to Starknet’s hybrid councils and NounsDAO’s cultural auctions prove that legitimacy no longer comes from tokens alone.

Yet the challenges remain unresolved. Participation rarely exceeds 15%, treasury diversification is uneven, and delegate capture risks persist.

Treasury scale, without accountability and verifiable execution, is not resilience; it is fragility waiting to surface.

Forces shaping 2026–27 - AI, cross-chain standards, and regulation

Looking ahead to 2026-27, DAOs are changing the future of organisations through -

• AI governance agents that augment participation and reduce complexity, while raising questions of transparency and bias.
• Cross-chain governance standards that coordinate proposals and execution across Ethereum, rollups, and app-chains.
• Regulatory-ready frameworks that blend open participation with optional compliance, creating bridges for institutional adoption.

For builders, DAOs, and investors, the lesson is clear: governance is not an afterthought; it is a design choice that shapes protocol durability, adoption, and legitimacy.

Protocols that treat governance as programmable, verifiable infrastructure will set the standard. Those that continue to rely on symbolic or fragile systems will stagnate, or worse, become liabilities for the ecosystems they seek to govern.

Why protocols that treat governance as infrastructure will define the future

Ultimately, governance serves as the coordination layer for Web3. It decides not just who votes, but who allocates, who executes, and who holds accountability in a decentralized world. The protocols that get this right will not just survive the next cycle, they will define it.

At Lampros Tech, we help DAOs move past symbolic voting and design governance that actually works, resilient treasuries, broader participation, and verifiable execution.

Explore our DAO services to see how we build systems that last.

Barsha Mandal

Growth Lead

Barsha is the Growth Lead at Lampros Tech, a blockchain development company helping businesses thrive in the decentralized ecosystem. With an MBA and expertise in content strategy, technical writing, SEO & scaling blockchain development initiatives and translating complex Web3 concepts into accessible communications that drive engagement and business growth.

CONNECT ON:

See more

See more