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AI to Strengthen DAO Governance

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Crypto Breaking News

Vitalik Buterin, a co-founder of Ethereum, argues that artificial intelligence could reshape decentralized governance by addressing a core constraint: human attention. In a Sunday post on X, he warned that despite the promise of democratic models like DAOs, decision-making is hindered when members must tackle a flood of issues with limited time and expertise. Participatory rates in DAOs are often cited as low — typically between 15% and 25% — a dynamic that can concentrate influence and invite disruptive maneuvers when attackers seek to pass proposals without broad scrutiny. The broader crypto ecosystem is watching how AI tools could alter governance, privacy, and participation.

Key takeaways

  • Attention limits are identified as a primary bottleneck in democratic on-chain governance, potentially hindering timely decisions in DAOs.
  • Delegation, while common, risks disempowering voters and centralizing control in a small group of delegates.
  • DAO participation averages around 15–25%, creating opportunities for governance attacks and misaligned proposals.
  • AI-powered assistants, including large language models, could surface relevant information and automatically vote on behalf of members, provided privacy and transparency safeguards are in place.
  • Privacy remains a critical design concern; proposals for private LLMs or “black box” personal agents aim to protect sensitive data while enabling informed judgments.
  • Parallel efforts, such as AI delegates from the Near Foundation, illustrate practical explorations into scalable, participatory governance models.

Market context: The governance conversation unfolds amid broader discussions about AI safety, on-chain transparency, and regulatory scrutiny of token-weighted voting mechanisms. As networks scale, trials with AI-assisted decision-making could influence how quickly new proposals are vetted and executed, impacting liquidity, risk sentiment, and user participation across the crypto ecosystem.

Why it matters

The notion of AI-assisted governance enters crypto governance at a pivotal moment. If DAOs are to meaningfully scale beyond niche communities, they must solve the “attention problem” that limits who can participate and how often. Buterin’s argument centers on the danger that without broad and informed participation, governance can drift toward the preferences of a vocal minority or, worse, become vulnerable to coordinated attacks. The cited participation range, often quoted as 15–25%, underscores the fragility of consensus in diverse, globally distributed communities. When only a fraction of members engage, a coordinated actor with concentrated token holdings can steer outcomes that don’t reflect the broader base.

AI-powered assistants offer a potential path forward by translating dense policy options into actionable votes, tailored to an individual’s stated preferences. The idea rests on personal agents capable of observing user input — writing, conversations, and explicit statements — to infer voting behavior. If a user is uncertain about a specific issue, the agent would solicit input and present relevant context to inform the decision. This approach could dramatically increase effective participation without requiring each member to study every proposal in depth. The concept is anchored in current research into large language models (LLMs), which can aggregate data from diverse sources and present concise options for voter consideration.

Still, the privacy dimension looms large. Buterin has stressed that any system enabling more granular inputs must protect sensitive information. Some governance challenges arise precisely because negotiations, internal disputes, or funding deliberations often involve material that participants would prefer not to expose publicly. Proposals for privacy-preserving architectures include private LLMs that process data locally or cryptographic methods that output only the voting judgment, without revealing the underlying private inputs. The aim is to strike a balance between empowering voters and safeguarding their personal information.

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Industry voices beyond Buterin echo this tension. Lane Rettig, a researcher at the Near Foundation, has highlighted parallel efforts to use AI-driven digital twins that vote on behalf of DAO members to counter low voter turnout. The Near Foundation’s exploration, described in coverage linked to AI delegation, signals a broader push to test AI-enabled delegation tools within a governance framework that remains accountable to the community. For those following the space, leadership in this domain is moving from conceptual discussions to concrete prototypes that can be observed and tested on real networks.

Another facet concerns strategic risk. The potential for “governance attacks” remains a real concern in token-weighted systems, where a malicious actor could amass enough influence to push harmful proposals. Researchers and builders are keen to ensure that any AI-assisted approach includes checks and balances, such as transparent audit trails, user override capabilities, and governance-rate limits to prevent rapid, unilateral shifts in policy. The literature and case studies cited in industry coverage emphasize that while technology can augment participation, it must not bypass the need for broad human oversight and robust protection against privacy invasions or manipulation. For context, earlier discussions in the crypto press have explored simulated transactions and other security models as ways to harden governance against abuse.

As the field evolves, partnerships and experiments in AI-assisted voting will continue to surface. The idea of “AI delegates” mirrors broader conversations about accountability and consent in automated decision-making. A number of projects have spotlighted the potential for AI to digest vast policy options, present them succinctly, and enable members to approve or customize how their tokens are used. The emerging consensus suggests that any path forward will require a layered approach: accessible information for all participants, privacy-preserving mechanisms for sensitive data, and safeguards against both technical and social vulnerabilities.

Readers can trace the thread of these ideas through related discussions on how governance models adapt to AI. For example, articles exploring the role of LLMs in decentralized decision-making and the implications for privacy and security provide a framework for evaluating new proposals as they emerge. The debate also intersects with broader AI governance conversations, including how to ensure that automated agents align with user intent without overstepping privacy boundaries or enabling unauthorized manipulation. The evolving dialogue recognizes that while AI can amplify participation, it should do so without eroding trust or undermining the democratic ethos at the heart of decentralized networks.

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What to watch next

  • Public pilots of AI-assisted voting or AI delegates in active DAOs, with timelines and governance metrics published in the coming quarters.
  • Regulatory developments or guidelines affecting on-chain governance, including transparency and privacy standards for AI-assisted decision tools.
  • Progress reports from the Near Foundation on AI delegates and related governance experiments, including measurable effects on participation rates.
  • Technical demonstrations of privacy-preserving voting mechanisms, such as private LLMs or cryptographic approaches that protect input data while exposing voting outcomes.
  • Ongoing analyses of governance security, including modifications to prevent governance attacks and ensure resilience against token-weighted manipulation.

Sources & verification

AI governance and the next frontier for on-chain democracy

In the Ethereum (CRYPTO: ETH) ecosystem, researchers and builders are weighing how artificial intelligence could address the attention problem that Buterin highlighted. In a recent meditation on governance, he argued that the effectiveness of democratic and decentralized models hinges on broad participation and timely, expert input. Current participation rates for many DAOs hover around 15–25%, a level that can concentrate power among a small circle of delegates or core members. When the electorate stays largely silent, proposals with strategic misalignment can slip through, or worse, governance attacks can overwhelm a network by capitalizing on token-weighted voting power.

To counter these dynamics, the idea of AI-powered assistants that vote on behalf of members has gained traction. He suggested that large language models could surface relevant data and distill policy options for each decision, allowing users to consent to votes or to delegate tasks to an agent that reflects their preferences. The concept hinges on personal agents that observe your writing and conversation history to infer your voting posture, then submit a stream of votes accordingly. If the agent is uncertain, the agent should prompt you directly and present all relevant context to inform your decision. The vision is not to replace human judgment but to augment it with scalable, personalized insights.

The debate closely mirrors ongoing experiments beyond Ethereum. Lane Rettig of the Near Foundation has described AI-powered digital twins that vote on behalf of DAO members as a response to low turnout, a concept the foundation has explored in public discourse and research coverage. Such prototypes aim to maintain governance legitimacy while lowering the friction barrier for participation. The discourse reflects a broader industry consensus that AI-driven governance must be transparent, auditable, and privacy-preserving to gain wide trust across diverse communities.

Privacy considerations are not merely a secondary concern; they are central to any viable governance augmentation. Buterin has stressed the possibility of a privacy-forward architecture where a user’s private data could be processed by a personal LLM without exposing inputs to others. In this scenario, the agent would output only the final judgment, keeping private documents, conversations, and deliberations confidential. The challenge is to design systems that scale participation without compromising sensitive information or opening new vectors for surveillance or exploitation. The balance between openness and privacy will likely shape the tempo and nature of AI-assisted governance experiments across networks and ecosystems.

As the field evolves, several threads warrant close attention. First, concrete pilot programs will reveal whether AI delegates can meaningfully improve turnout and decision quality without eroding accountability. Second, governance models will need robust safety rails to prevent automated voting from overriding collective will through manipulation or covert data leaks. Third, privacy-preserving technologies will be essential to sustain user trust, especially in negotiations or funding decisions that could affect project trajectories. Finally, the ecosystem will watch the practical implications for security and resilience, including the potential for new forms of governance attacks and protective measures against them.

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The S&P 500 is officially coming to crypto with its first-ever 24/7 perpetual futures product

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The S&P 500 is officially coming to crypto with its first-ever 24/7 perpetual futures product

S&P Dow Jones Indices announced Wednesday that it is bringing the S&P 500 to the blockchain via the Hyperliquid platform, making it easier for investors to trade the most widely tracked equity index 24 hours a day.

The company said it licensed its flagship stock index to Trade[XYZ], which is launching the first officially approved S&P 500 perpetual contract on the Hyperliquid blockchain.

In simple terms, this means eligible non-U.S. investors can trade the S&P 500 onchain, around the clock, without using traditional stock exchanges.

Perpetual futures contracts, or “perps,” are derivative instruments without expiration dates that allow investors to place bets on an asset’s price without owning it, using funding rates, typically every few hours, to keep prices aligned with spot markets. Their infinite duration (perpetual futures contracts never expire, unlike traditional contracts), high-leverage options, and round-the-clock access have made them extremely popular in the crypto space and have generated billions in daily trading volume across exchanges.

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For the S&P 500, it is the first time it has been turned into a perpetual product with official backing from S&P. It also uses the firm’s real-time index data, bringing a more traditional finance standard into crypto trading. This guarantees the accuracy of index trading while the traditional market remains closed.

S&P says the goal is to expand where and how its indexes can be used. “This collaboration expands access” to its benchmarks in digital markets, said S&P’s Chief Product Officer Cameron Drinkwater.

24//7 trading

The move opens the door for non-U.S. investors to get leveraged exposure to the S&P 500 through a blockchain-based platform.

For example, if big macro news hits on the weekend, when the market is closed, traders traditionally need to speculate on how the S&P 500 will move on Monday, when the market opens. However, with these new perpetual contracts, traders can place bets immediately and with accuracy as soon as news breaks. Recently, crypto traders were able to trade oil futures on decentralized exchange Hyperliquid on a weekend, when the first missile hit Iran, while traditional oil markets remained closed.

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Trade[XYZ] runs on Hyperliquid, a decentralized network built for fast trading. The platform says its markets are always open, unlike stock exchanges that close after hours and on weekends. XYZ markets have exceeded $100 billion since October, with an annualized run rate of more than $600 billion.

The news seems to have helped HYPE, the native token of the Hyperliquid platform. The token is up 2.2% over the past 24 hours, 14.2% over the past 7 days, and 35.5% over the past month. Hyperliquid has recently become a crypto trader’s favorite platform for trading markets outside traditional finance.

Recently, Maelstrom CIO and BitMEX Co-Founder Arthur Hayes said traders are increasingly using Hyperliquid to access markets unavailable on traditional platforms, noting that the HYPE token could reach $150, citing the platform’s strong revenue, real trading activity, and disciplined token supply.

Trade[XYZ] said the S&P 500 is just the starting point as it looks to bring more traditional assets onchain. “The S&P 500 is a natural starting point. It represents the most widely tracked equity index on earth and has been the defining benchmark for global equities for decades,” said Collins Belton, chief operating officer and general counsel of Trade[XYZ]’s parent company.

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The announcement builds on S&P DJI’s prior decentralized finance initiatives, including its recent launch of the S&P Digital Markets 50 index, the company said.

Read more: 2026 Marks the Inflection Point for 24/7 Capital Markets

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Ethereum Foundation Deposits Another $7.5M in ETH From Its Treasury into Morpho

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Ethereum Foundation Deposits Another $7.5M in ETH From Its Treasury into Morpho

The move follows the EF’s first deployment into the DeFi lending protocol in October, and is part of its updated treasury policy.

The Ethereum Foundation has deposited another 3,400 ETH — worth roughly $7.5 million at today’s prices, near $2,220 — into DeFi lending protocol Morpho, with 1,000 ETH allocated specifically to Morpho Vaults V2, according to a X post from the EF today, March 18.

The move follows an initial deployment in October 2025, when the EF put 2,400 ETH (~$5.3 million) and approximately $6 million in stablecoins into the protocol — bringing the Foundation’s total Morpho commitment to just under $19 million to date.

According to the post, the DeFi deployments are a direct expression of the EF’s refreshed treasury policy, first unveiled in June 2025, which codified a new “Defipunk” framework to guide on-chain capital allocation.

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As The Defiant reported at the time, the policy signaled that DeFi was no longer a sideshow for the Foundation — it was putting its ETH where its mouth is, prioritizing permissionless, immutable, audited protocols aligned with cypherpunk values over passive ETH sales to cover operations.

The EF also elaborated on why it chose to deploy in Morpho, and in particular praised Morpho Vaults V2, which launched in September. The Foundation cited the product’s GPL-2.0 open-source license — a deliberate choice, it noted, that makes the codebase permanently able to be audited and forked.

Crucially, Vaults V2’s core contracts are immutable: no admin keys, no upgrade mechanisms, no emergency switches. “The true cypherpunk infrastructure doesn’t ask you to trust its builders, and it removes the need entirely,” the Foundation wrote in its X announcement.

According to DefiLlama, Morpho is currently the second-largest DeFi lending protocol behind Aave, with a total total value locked (TVL) of over $6.9 billion. The protocol has attracted significant institutional interest in recent months, including a deal for Apollo Global Management — which manages nearly $940 billion in assets — to acquire up to 9% of Morpho’s 1 billion total token supply over four years.

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The EF framed the Morpho allocation as a question of ecosystem direction:

“What kind of DeFi ecosystem is Ethereum aiming to support, and how should it weigh short-term performance against long-term resilience and openness? Choices like licensing and architecture may seem small, but they shape which of these paths remain viable over time.”

The treasury move comes amid a busy stretch for the Foundation. Just last week, the EF published its 38-page EF Mandate, which sparked debate in the community over whether the Foundation risks taking a backseat at a critical moment for institutional adoption.

In February the EF also pledged to deepen its support for privacy-first, permissionless DeFi, forming a dedicated internal unit to support builders adhering to those principles. The Morpho deposit suggests the commitment is more than rhetorical.

This article was written with the assistance of AI workflows. All our stories are curated, edited and fact-checked by a human.

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Views for next Fed rate cut pushed back after hot inflation report

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Views for next Fed rate cut pushed back after hot inflation report

Construction work continues at the Marriner S. Eccles Federal Reserve building in Washington, DC, on Dec. 30, 2025.

Brendan Smialowski | AFP | Getty Images

A hotter-than-expected wholesale inflation reading for February had traders contemplating the possibility that the Federal Reserve won’t be lowering interest rates at all this year.

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Following a Bureau of Labor Statistics report that the producer price index posted its biggest gain in a year, futures markets took any realistic chance of a cut off the table until at least December.

Even then, odds of a reduction at the final Fed meeting of the year fell to about 60% as persistently higher inflation — brought on by tariffs, the Iran war and elevated services costs — will keep the central bank on hold. The PPI report came just hours before the Federal Open Market Committee was to release its latest interest rate decision.

The wholesale inflation reading “likely reinforces a hold decision by the Federal Reserve later today but tilts the risk toward a more hawkish tone in today’s FOMC” statement, said Eugenio Aleman, chief economist at Raymond James. “Even if rates are left unchanged and we see multiple dissents, the messaging may lean toward ‘higher for longer,’ especially with energy inflation set to re-enter the picture in coming months.”

Prior to the war that began Feb. 28, traders had been looking for interest rate cuts in both June and September, with an outside possibility of one more in December as the Fed sought to balance its dual mandate of stable prices and low unemployment.

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But odds for a June cut have now slumped to just 18.4%, July is down to 31.5% and September to 43.6%, according to the CME’s FedWatch tool, which calculates probabilities using 30-day fed funds futures contracts.

Low conviction

Chances for a December reduction were at 60.5%, indicating that traders are leaning toward a cut, though with a relatively low level of conviction. Historically, the 60% level or above has been associated with Fed moves in either direction.

Futures are implying a 3.43% fed funds rate by the end of 2026, compared to the current level of 3.64%.

To be sure, trading in fed funds futures is volatile, and the Fed could be pushed back into an easing stance if the labor market weakens further. Fed Governors Stephen Miran and Christopher Waller have been advocating for immediate cuts, though the rest of the committee seems more inclined to hold rates where they are until the economic picture clears.

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Correction: The Iran war began Feb. 28. A previous version misstated the country’s name.

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SBI VC Trade Launches USDC Lending Service for Japan Users

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SBI VC Trade Launches USDC Lending Service for Japan Users

SBI Holdings’ digital asset arm, SBI VC Trade, said it will launch a USDC lending service in Japan on Thursday, allowing retail users to lend stablecoins to the platform under fixed-term agreements in exchange for returns.

On Wednesday, the company said users will be able to lend Circle’s USDC (USDC) stablecoin to the platform and receive interest payments, with a maximum application of 5,000 USDC per offering. The product is structured as a loan to SBI VC Trade rather than a deposit, meaning users take direct counterparty risk. SBI said it may also re-lend the borrowed USDC as part of its operations.

The launch marks a further step in Japan’s stablecoin rollout, bringing a consumer-accessible USDC yield product to market through a licensed domestic platform.

SBI said the product is intended as an alternative to traditional US dollar deposits in Japan, though, unlike bank deposits, segregation protections do not cover user assets and may not be fully recoverable in the event of insolvency. Users are also unable to withdraw or transfer funds during the fixed lending term, limiting their ability to respond to market conditions.

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Translated table comparing tax treatment of USDC lending and foreign currency deposits in Japan. Source: SBI VC Trade

SBI expands stablecoin footprint

The launch follows an initial announcement in November, when SBI VC Trade said it planned to launch a USDC lending product and was exploring exchange-traded fund (ETF) products, according to Reuters. 

The development comes as SBI has been expanding its stablecoin strategy. SBI VC Trade began a full-scale USDC launch in Japan on March 26, 2025, after receiving regulatory approval earlier that month. Circle said the approval made USDC the first approved global dollar stablecoin for use in Japan.

Related: SBI Holdings targets majority stake in Singapore crypto exchange Coinhako

On Aug. 22, SBI announced the establishment of a joint venture with Circle, aiming to promote the use of USDC in Japan and create new use cases for the stablecoin in digital finance. 

On Dec. 16, the company partnered with Startale to develop a regulated yen-denominated stablecoin aimed at tokenized assets and global settlement, with a planned launch in the second quarter of 2026.

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