To survive regulatory attacks & credibly serve politically acceptable public policy goals, DAOs & protocol governance must change.

They need to be broken up to look less like a single cohesive enterprise where success is measured in one direction (economic benefits to gov tokens) (monolithic governance) & turned into self-help mechanisms for diverse mini-communities (pluralistic governance).

I do believe this is the ultimate intent of DAOs, but the implementation does not fully match that intent, and there has been mission creep into becoming on-chain corporations (pushed in large part by VC-ification).

e.g., A change to a lending market smart contract (parameter change of existing contract or proxy upgrade from existing contract to new contract) should require holding both the DAO tokens *and* cTokens, with voting power being a function of the two token positions.

Similarly, a change to a yield farming vault strategy would require holding the governance token + the yTokens.

Basically, every protocol DAO would be broken into subDAOs where interest-alignment is stronger in a specific dimension.

To prevent securities law issues, system rewards would also flow through these sub-DAOs rather than being monolithic--this way, they are more like user rebates than like profits to a business.

If we don't evolve toward this regulators and politicians are going to shred us; many DAOs currently just look like businesses and suffer many of the same agency and conflict of interest problems as corporations but in most respects have fewer protections than corporations.