Decentralized Autonomous Organizations, or DAOs, became quieter and less decentralized in 2025.
This is evident from ‘State of DeFi’, a new report from DL News and sister companies DL Research and DefiLlama.
DAOs are the crypto cooperatives that operate some of the largest and most successful blockchain-based applications, such as Aave and Uniswap.
According to the report, the previous year was a high point for the DAO board. This year, however, the number of proposals and the number of people voting for these proposals fell sharply at several major DAOs.
The plunge is a worrying sign for crypto purists, who envision a future financial system free of middlemen, where business decisions are made not by fiat from a small cadre of executives, but democratically by thousands, if not millions, of user-owners.
The report analyzed the DAOs that control Aave, Lido, Uniswap, Arbitrum, Balancer and Frax.
In all six cases, the number of proposals fell by at least 60% and as much as 90% year-on-year, the report shows.
Median voter participation also fell across every protocol except Lido, which saw an increase in participation after the implementation of new rules.
DAO apathy is no secret: the cooperatives have been trying to encourage the participation of token holders for years.
While the number of voters fell, the number of votes cast rose in all six DAOs, the report said, indicating that an increasing number of voters are lending their tokens to delegates – actors similar to elected representatives within the cooperatives.
“This pattern confirms a structural shift in DeFi governance away from broad retail-style token participation towards a model dominated by a relatively small group of professional delegates, large liquidity providers, protocol-aligned funds and long-term strategic token holders,” the report notes.
“From an institutional perspective, this transition improves governance predictability and operational coherence, but it also raises lingering questions around risk capture and the relevance of minority token holders.”
Here are some other trends that have emerged in 2025, according to the report.
Diversification, but slowly
In the decentralized finance world, revenues have long been concentrated among a small group of hyper-profitable companies. In 2025, crypto wealth started to spread – but only a little.
“Revenue expanded across nearly all major industries, but the distribution of that growth revealed a clear structural pattern: a small group of protocols continues to dominate reimbursement, while a new wave of new entrants reshapes competition within key industries,” the report said.
According to the report, the top 10 protocols took 60% of all fees this year. The top 20 achieved no less than 80%.
But that’s actually an improvement from 2024, when the six major protocols accounted for 70% of all costs.
Stablecoin issuers Tether and Circle remain in a league of their own, accounting for 54% and 18% of all fees respectively.
Behind them, perpetual exchanges like Hyperliquid grew to become one of the most lucrative businesses in DeFi.
Four perpetual exchanges accounted for 7.5% of all fees captured by DeFi protocols in 2025. Even more remarkably, their revenues remained stable regardless of the direction of the broader crypto markets, the report said.
Decentralized exchanges, on the other hand, saw their fortunes tied to crypto’s volatility, the report said.
The number of buybacks is increasing
Governance tokens found themselves in a tricky spot last year: they let users participate in DAO decision-making, but no one really wanted to delve into the weeds of protocol governance.
That raised an uncomfortable question for investors who bought these tokens: What were they really worth?
That started to change in 2025. This year, the share of protocols distributing revenue to token holders has tripled, from 5% to 15%, according to the report.
Major protocols such as Aave and Lido have approved buyback programs this year.
“As competition intensifies and tokens become increasingly similar to traditional financial assets, it is expected that more protocols will adopt a similar approach,” the report said.
One reason: the world’s largest economy has become more friend than enemy, according to the report.
Under former President Joe Biden, the US’s top financial regulators seemed to think that virtually every crypto asset was an unregistered security. And making a token more secure by including a dividend-like income distribution would only have prompted investigation, according to crypto advocates.
Under Biden’s successor, American policy has made a 180 degree turn. Open investigations have been halted as lawmakers debate a bill that could categorize most tokens as commodities, subject to less onerous regulations.
But there is another reason for the change, the report said.
Cheap chains
Blockchains have become cheaper to use. Nowhere is the change greater than in Ethereum, which has maintained its leading role as the birthplace of decentralized finance.
Average transaction fees on Ethereum have fallen by 86% since 2021, while the number of transactions has almost tripled, according to the report.
In 2021, blockchains captured 54% of all user fees, while applications accounted for just 34%, the report said. In 2024, applications outpaced the platforms they were built on, shifting 47% of all costs to blockchains’ 42%.
In 2025, applications will determine the generation of reimbursements: they represent 66% of all reimbursements. Blockchains, meanwhile, only captured 19%.
“Competition has played a central role in driving down costs,” the report said. “The rise of Solana in 2021 set a clear precedent by demonstrating that high throughput and low fees were achievable, pushing Ethereum and other ecosystems to accelerate their scaling plans.”
That change has left many protocols cash-rich, allowing them to innovate and send some of their revenue to token holders.
Aleks Gilbert is the New York-based DeFi correspondent for DL News. You can reach him at [email protected].
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