Decentralized autonomous organizations (DAOs) were built on an ideological premise that is now running up against the realities of running a business, where decentralization collides with the need for legal ownership and control.
On March 11, DAO Across Protocol made a controversial proposal to transition to a private company through a token-to-equity exchange buyout. Risk Labs, the team behind Across (ACX), said that the token and DAO structure “materially” impacted its ability to close deals with enterprises and institutions.
The industry reaction has been split. Decentralized finance (DeFi) researcher Ignas called it a “huge failure of crypto.”
“It feels like a betrayal of the crypto spirit: investment access for everyone, anywhere, globally,” Ignas said on X. “I hope other DAOs don’t follow them.”
The DAO structure is holding back Across’ stablecoin business
Crosschain Bridge Across Protocol currently operates under a token and DAO structure, with Risk Labs overseeing development through a foundation model.
Risk Labs’ proposal outlines a transition to a newly formed US C-corporation that would take over protocol development and commercialization. ACX holders could exchange their tokens for equity in the new entity or opt into a buyout.
“[DAOs] were supposed to replace the archaic organizational infrastructure that is marked by greed and a lack of trust,” Matthew Pinnock, founder of DeFi project Altura, told Cointelegraph.
“However, as the industry increasingly moves toward real-world assets and institutional capital, protocols are running into structural limitations. Institutions typically need a clear legal counterparty that can sign contracts and undergo due diligence, something a decentralized collective cannot easily provide,” Pinnock added.
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Across co-founder Hart Lambur said that in Across’ case, having a token “generally hurts more than it helps.”
“We launched the Across token very early, at a very low valuation, and with a very broad airdrop. We picked this strategy so that we could build value in public with our community,” Lambur said on X. “Today, the macro environment has changed. Tokens are undervalued and underappreciated.”
Across is positioned around stablecoin infrastructure, which partly explains its transition. The goal is to enable fund movements across stablecoins at parity, with fees absorbed by issuers or partners rather than end users. Lambur said that securing related agreements requires contracts and offchain payment arrangements that are not well suited to DAO structures.
ShapeShift dissolved its corporate entity to become a DAO
As protocols rethink DAO structures, ShapeShift offers a counterpoint. The crypto trading platform transitioned into a DAO in 2021, dissolving its corporate entity in favor of tokenholder governance.
Tim Black, product lead at ShapeShift DAO, said many teams adopted DAO structures during the last cycle as part of a broader narrative, without fully accounting for the operational complexity involved.
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“What Across is proposing is essentially admitting that. They’re saying the DAO experiment helped bootstrap the network, but a company structure is better suited to the next phase,” Black told Cointelegraph.
“Many teams quietly operate like companies already,” he added. “Shapeshift was innovative in using workstreams, mirroring departments, but they still create more friction than collaboration over time.”
Social media debates steered toward tokenized equity as the way to go over the traditional corporate structure, with Ignas claiming that it would be progress for the industry. But Black thinks that says more about token designs than the concept, as many governance tokens already function as pseudo equity.
“The original idea behind governance tokens was coordination, not ownership… If they just become equity substitutes, then the experiment has basically collapsed back into the corporate model it was supposed to challenge,” he said.
Across’ corporate structure isn’t finalized
If transitions like Across’ become more common, the outcome may not be a single direction for DeFi, but a split in how protocols are structured and operated.
“One side becomes corporate crypto, protocols run like fintech companies with tokens functioning more like shares. The other side stays genuinely decentralized and accepts the operational friction that comes with that,” said Black.
That shift is already being shaped by the influx of institutional capital and RWAs, which impose requirements that DAO structures often struggle to meet.
“That is why we are seeing DAOs taking the regulatory black pill and dropping the D that made them decentralized autonomous organisations,” Pinnock said.
As protocols adapt, some are moving toward clearer legal frameworks and centralized execution layers, while others continue to prioritize open participation and community governance.
Though Across is eyeing a corporate structure, it still operates as a DAO today. It framed its proposal as a “temperature check” to signal that no final decision has been made. It still needs to pass a governance vote and get the blessing of its token holders.
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