DAOs are forcing crypto protocols to choose between code and emergency brakes

According to CryptoSlate, decentralized autonomous organizations (DAOs) are increasingly forced to choose between pure code execution and emergency brakes. Recent studies from the Max Planck Institute for Software Systems and Vrije Universiteit Amsterdam examined 48 large Ethereum DAOs, revealing that rules surrounding registration, staking, and delegation routinely concentrate voting power among a small group of participants.

This tension was highlighted by Compound's Proposal 289, which nearly transferred 499,000 COMP tokens from the protocol's treasury after a late voting surge. Although the code worked as intended, Compound lacked an emergency authority to pause the software. Following the dispute, Compound settled the issue by canceling the allocation and adding a veto role, introducing an emergency brake to its automated governance structure.

Researchers noted that while safeguards like registration, staking lockups, and delegation protect treasuries and prevent spam, they also tend to concentrate practical control. Across the analyzed DAOs, the ten largest holders controlled more than half of the voting power in 39 organizations, showing how decentralized ownership can still funnel control toward a small fraction of participants.