Ethereum co-founder Vitalik Buterin claims it is a “bad idea” to use artificial intelligence (AI) for governance. In an X post on Saturday, Buterin wrote:

“If you use an AI to allocate funding for contributions, people WILL put a jailbreak plus “gimme all the money” in as many places as they can.”

Why AI governance is flawed

Buterin’s post was a response to Eito Miyamura, co-founder and CEO of EdisonWatch, an AI data governance platchorm who revealed a fatal flaw in ChatGPT. In a post on Friday, Miyamura wrote that the addition of full support for MCP (Model Context Protocol) tools on ChatGPT has made the AI agent susceptible to exploitation.

The update, which came into effect on Wednesday, allows ChatGPT to connect and read data from several apps, including Gmail, Calendar, and Notion.

Miyamura noted that with just an email address, the update has made it possible to “exfiltrate all your private information.” Miscreants can gain access to your data in three simple steps, Miyamura explained:

First, the attackers send a malicious calendar invite with a jailbreak prompt to the intended victim. A jailbreak prompt refers to code that allows an attacker to remove restrictions and gain administrative access.

Miyamura noted that the victim does not have to accept the attacker’s malicious invite for the data leak to take place.

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The second step involves waiting for the intended victim to seek ChatGPT’s help to prepare for their day. Finally, once ChatGPT reads the jailbroken calendar invite, it gets compromised—the attacker can completely hijack the AI tool, make it search the victim’s private emails, and send the data to the attacker’s email.

Buterin’s alternative

Buterin suggests using the info finance approach to AI governance. The info finance approach consists of an open market where different developers can contribute their models. The market has a spot-check mechanism for such models, which can be triggered by anyone and evaluated by a human jury, Buterin wrote.

In a separate post, Buterin explained that the individual human jurors will be aided by large language models (LLMs).

According to Buterin, this type of ‘institution design’ approach is “inherently more robust.” This is because it offers model diversity in real time and creates incentives for both model developers and external speculators to police and correct for issues.

While many are excited at the prospect of having “AI as a governor,” Buterin warned:

“I think doing this is risky both for traditional AI safety reasons and for near-term “this will create a big value-destructive splat” reasons.”

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Aave, the largest decentralized lending protocol, has proposed reducing its exposure to governance risks within the Ethereum layer-2 network, Scroll’s ecosystem.

The initiative, submitted on Sept. 11 by the Aave Chan Initiative (ACI), comes amid mounting instability in Scroll’s decentralized governance model.

The proposal outlines several defensive measures to protect Aave’s users and liquidity pools. These include raising the reserve factor for all listed assets to 90%, lowering supply caps to existing levels, and cutting borrowing caps for all borrowable assets.

According to ACI, these steps will help contain exposure to Scroll-based assets, reinforce protocol safety through conservative risk parameters, and ensure Aave can respond swiftly if governance disruptions escalate.

ACI pointed out that the proposal’s implementation will proceed through the Direct to AIP process, which allows for faster deployment of urgent changes.

Data from DeFiLlama shows that Aave currently holds about $6 million in total value locked (TVL) on Scroll, making it the chain with one of its smallest liquidity pools.

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Scroll’s DAO issues

The urgency of Aave’s proposal stems from internal turmoil at Scroll’s decentralized autonomous organization (DAO). Scroll announced earlier in the day that it had halted new proposals within its DAO as part of a plan to redesign governance.

Scroll said the decision would allow experimentation with governance models emphasizing efficiency, effectiveness, and alignment. The team also stressed that the pause aims to safeguard stability in the short term while laying the groundwork for sustainable growth.

Meanwhile, Scroll stressed that proposals that have already been approved will proceed. However, fresh submissions will be paused until the new structure is introduced.

This move comes after leadership turbulence within the DAO. Olimpio, a Scroll delegate, confirmed that the DAO’s lead, known as Eugene, resigned earlier in the week.

According to Olimpio, this departure has left the community facing uncertainty, with several proposals now stalled. These include a treasury management initiative, the formation of a governance council, and a test of a DAO timelock mechanism.

USDC stablecoin issuer Circle has announced plans to launch Arc, its own enterprise-focused Layer 1 blockchain, according to an Aug. 12 statement.

According to the firm:

“Arc aims to establish itself as foundational infrastructure for regulated money movement, supporting a globally distributed financial system.”

Circle said Arc will integrate fully with its existing platform while maintaining interoperability with dozens of other partner blockchains.

Arc’s public testnet is scheduled for release between September and December 2025.

Circle’s Arc

Arc will serve as a high-performance base for stablecoin payments, foreign exchange (FX), and capital markets applications.

The network will be compatible with the Ethereum Virtual Machine and will use USDC as its default gas token. It also introduces a built-in stablecoin FX engine, sub-second settlement finality, and optional privacy features.

According to the blockchain network’s litepaper, Arc’s performance targets include 3,000 transactions per second (TPS) with under 350 milliseconds finality using 20 validators. Notably, the network could reach 10,000 TPS and under 100 milliseconds of finality with four validators.

Arc will also integrate confidential transfers, enabling hidden amounts with visible addresses, alongside selective disclosure via a “view key.”

Meanwhile, its MEV mitigation roadmap includes encrypted mempools, batch processing, and multi-proposer setups.

Arc will support Circle’s USYC, an interest-bearing stablecoin backed by short-term US Treasury securities. It will also offer fast bridging via Circle’s CCTP and Gateway, a built-in currency trading system for approved institutions, and AI-powered treasury management tools.

Beyond stablecoins, Arc is designed to host regulated real-world assets such as tokenized equities, bonds, private credit, and institutional-grade funds.

Circle plans to partner with licensed asset issuers, custodians, and fund administrators to ensure these assets are legally compliant, fully collateralized, and integrated with traditional financial obligations.

Community pushback

Despite its ambitious design, Arc has faced pushback from crypto community members.

Columbia Business School adjunct professor Omid Malekan argued that launching another Layer 1 is unnecessary, especially for stablecoins, which may struggle without diverse assets or strong DeFi ecosystems.

Adam Cochran, partner at venture capital firm Cinneamhain Ventures, also criticized the characterization of Arc as a Layer 1 blockchain.

According to him, the network is more accurately a consortium chain operated by a set of pre-approved, private validators. These validators, he noted, have the authority to reverse transactions through “dispute protocols.”

Moreover, he also argued that using USDC as the root token removes the economic incentives needed for validators to act independently, making a decentralized Layer 1 model unfeasible. As a result, he said, the design necessitates a closed, consortium-based structure.

Cochran concluded:

“Blockchains exist because exploitative middlemen, like banks and transfer agents, take undue fees and apply undue censorship. This industry was built to fix that in peer-to-peer systems, not by just building new banks.”

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Cardano (ADA) has achieved a significant milestone with the successful completion of its first-ever on-chain governance vote. For the first time, core development funding has been directly approved by the Cardano community, marking a significant step forward in the blockchain’s transition to fully decentralized governance. Reacting to the milestone, Cardano’s founder, Charles Hoskinson, shared his thoughts on the network’s progress. 

Cardano Enters New Era Of Decentralized Governance

The Cardano ecosystem has reached a pivotal moment in its growth and evolution, marking a historic milestone with the recent execution of its first governance vote. The landmark event signals the beginning of a new phase for the blockchain, where decisions around core development funding are now being made directly by the community rather than centralized entities.

Related Reading

Hoskinson publicly acknowledged the significance of the event in an X social media post on August 3. He praised the community for their support and trust, reinforcing the belief that decentralized governance is not just a vision but now an operational reality within the Cardano ecosystem. 

Hoskinson’s remarks came in response to an earlier post by Input Output Global (IOG), a blockchain research and development company behind Cardano’s development. IOG had commemorated the blockchain’s recent governance achievement by stating that the Cardano community had officially made history. 

The governance vote had approved direct funding for core development initiatives, representing a foundational shift in how the Cardano ecosystem grows and evolves. Rather than relying on a small group of decision-makers, the blockchain now empowers its global community to determine resource allocation collectively. Input Output Global praised both Cardano and its community’s efforts, calling the recent milestone the beginning of a new era of decentralized governance. 

Notably, the broader crypto community is already responding with enthusiasm, with many offering congratulations and support as Cardano celebrates this landmark event. The network’s successful governance vote sets a powerful precedent in the crypto industry, showcasing the potential of a blockchain governed directly by its users. 

Cardano Becomes Only Top 10 With On-Chain Governance 

In addition to its historic governance vote, Cardano has emerged as the only top 10 cryptocurrency by market capitalization to implement on-chain governance, setting a new benchmark for how blockchain ecosystems are managed and governed. 

Related Reading

According to a report by Cardanians (CRDN) on X, the blockchain’s governance framework is actively functioning, with 39 treasury withdrawal proposals currently open for voting. These proposals allow Delegated Representatives (DReps) and the broader community to directly participate in shaping the ecosystem by deciding which initiatives receive funding and move forward.

As of now, none of the other top 10 blockchains, including Bitcoin, Ethereum, XRP, USDT, Binance Coin, Solana, USDC, Tron, and Dogecoin, have matched Cardano’s level of on-chain decision-making power. While these cryptocurrencies continue to lead in various areas, Cardano stands out as the 10th-largest cryptocurrency by market cap with a uniquely advanced governance system.

Featured image from Adobe Stock, chart from Tradingview.com

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AI is evolving at breakneck speed, with autonomous agents now capable of analyzing markets, diagnosing diseases, writing code and making hiring decisions.

But as capabilities grow, so does a more profound unease – who governs these agents, and by what rules?

A handful of corporations are controlling access, performance and alignment. This centralization of intelligence data raises suspicions and a lack of trust.

Trust in AI (artificial intelligence) is not just about whether it works. It’s about who controls it, how it evolves and whether its behavior can be audited, questioned or improved.

In a centralized system, those questions are answered, if at all, behind closed doors.

Blockchain and Web 3.0 technologies offer a compelling alternative – decentralization as a design principle.

Rather than trusting a company, we verify the system. Rather than relying on goodwill, we rely on protocol.

The trust problem in centralized AI

The black-box nature of proprietary AI models limits transparency. Their training data, optimization strategies and update cycles are opaque.

Worse, these models often operate in high-stakes environments, making decisions that affect people’s finances, health or rights.

Without a clear understanding of how these decisions are made, trust becomes blind.

There’s also the concentration of infrastructure. The compute resources, data pipelines and deployment channels for advanced AI are primarily housed in private data centers.

This creates points of failure and reinforces a power imbalance, where end users become passive consumers of intelligence they cannot shape or interrogate.

Incentive structures compound the issue. Traditional AI development lacks mechanisms to reward verifiable contributions or penalize harmful behavior.

An agent that misbehaves suffers no cost unless its owner intervenes, and that owner may prioritize profitability over ethics.

What blockchain brings to the table

Blockchain offers a trustless architecture where AI systems can be governed, audited and incentivized in transparent, programmable ways.

One of the most profound shifts it enables is the ability to embed accountability directly into the AI stack.

Reputation becomes quantifiable. For instance, ABTs (AgentBound Tokens) are non-transferable cryptographic credentials proposed to track an AI agent’s conduct.

If an agent wants to perform high-stakes actions, it must stake its reputation. Misbehavior results in slashing, while good performance reinforces its credibility.

This creates economic alignment between the agent’s incentives and human expectations.

Blockchain also introduces auditability – by recording data origin, training history and decision logs on-chain, stakeholders can verify how and why a model made a particular choice.

Equally important is infrastructure decentralization. AI today is bottlenecked by the physical and economic constraints of centralized data centers.

With the rise of DePIN and decentralized storage systems like IPFS, AI workloads can be distributed across global participants.

This reduces costs, increases resilience and also breaks the monopoly over who gets to build, train and deploy models.

Multi-agent systems need shared rails

Autonomous agents are not isolated entities – increasingly, they must interact, whether to coordinate logistics, pricing services or optimize supply chains.

Without shared protocols and interoperable standards, these agents remain confined within their silos, unable to compose or collaborate.

Public blockchains provide the rails for agent-to-agent coordination. Smart contracts allow agents to make enforceable agreements. Tokenized incentives align behavior across networks.

A marketplace of services emerges where agents can buy compute, sell data and negotiate outcomes – without relying on centralized intermediaries.

Today, we can see prototyped ecosystem frameworks where agents operate semi-independently, staking tokens, verifying each other’s outputs and transacting based on shared economic logic.

It’s an overlay network for machine coordination, native to the internet.

Federated learning without a central brain

Training AI collaboratively across different parties without pooling sensitive data is a major frontier.

FL (federated learning) allows this by keeping data local and sharing only model updates.

But most FL implementations still rely on a central server to coordinate aggregation – a potential choke point and attack surface.

DFL (decentralized federated learning) removes this middleman.

With blockchain as the coordination layer, updates can be shared peer-to-peer, verified through consensus and logged immutably.

Each participant contributes to a collective model without ceding control or privacy.

Tokens incentivize high-quality updates and penalize poisoning attempts, ensuring the integrity of the training process.

This architecture is well-suited for healthcare, finance or any domain where data sensitivity is paramount and stakeholder plurality is essential.

Risks and trade-offs of on-chain AI

No system is without its challenges. Blockchain brings latency and throughput constraints that may limit its use in real-time AI systems.

Governance tokens can be manipulated, and poorly designed incentive schemes might create perverse behavior.

On-chain logic – once deployed – is challenging to change, posing risks if flaws go unnoticed.

There are also security concerns. If an AI relies on on-chain oracles or coordination, an attack on the underlying blockchain could cascade into AI behavior.

Moreover, reputation systems like ABTs require robust Sybil resistance and privacy safeguards to prevent manipulation.

These are not reasons to avoid blockchain – but they highlight the need for careful design, formal verification and a commitment to continuous refinement.

A new social contract for AI

At its core, blockchain gives AI a governance substrate – a way to encode norms, distribute power and reward alignment.

It reframes the question of ‘who controls the AI’ into ‘how is control encoded, executed and verified?’

This matters even more politically than technically. AI development without decentralization will likely go from open experimentation to corporate consolidation.

Blockchain offers a chance to build intelligent systems as public goods, not proprietary assets.

The challenge is to fuse the technical layers, data, model, incentive and control into a coherent stack.

But the path is visible – open protocols, transparent incentives and decentralized oversight. AI doesn’t just need blockchain for infrastructure. It needs it for legitimacy.

In a world of autonomous agents, trust can’t be a byproduct – it must be engineered. Blockchain gives us the tools to do precisely that.

Roman Melnyk is the chief marketing officer at DeXe.

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Solana’s largest decentralized exchange aggregator, Jupiter, has decided to halt all community voting through next year and keep its governance Treasury sealed until 2027, citing community burnout and a need to prioritize building new products.

The move temporarily disables one of the main utilities for Jupiter’s native token, JUP, which powers governance proposals and decisions within the Jupiter DAO.

Voting activities will be on hold until at least the end of 2025, according to a statement shared by team member Kash Dhanda.

He wrote:

“Recently, one thing has become clear: the current DAO structure isn’t working as intended. We hear the complaints. We see the breakdown in trust. We feel the perpetual FUD cycle that grows with every vote.”

The statement added that the team intends to shift energy away from frequent governance votes and toward strengthening the project’s product suite and market position.

The governance pause comes as Jupiter’s DEX remains a major player on Solana, with more than $2.2 billion locked on the platform and daily fees averaging $1.6 million. It handles upwards of 80,000 token swaps each day, serving over 18,000 daily active traders.

However, Jupiter’s aggregator has lost momentum in recent months, with user traffic dropping by up to 60% and competitors like PumpSwap dominating the meme coin niche, now accounting for a majority of that trading volume on Solana.

Treasury closed until 2027

Under the new plan, the DAO’s fund, known internally as the Litterbox Trustm will remain inaccessible for new spending or budget proposals for the next two years.

Revenue from staking services such as jupSOL will continue to feed the Treasury, but fresh JUP minting for workgroups and governance rewards has been suspended.

Regular staking will still be available to token holders, with about 50 million JUP reserved for ongoing staking incentives. Aside from an upcoming 700 million token distribution, part of the final phase of the Jupuary airdrop, no additional JUP emissions are planned.

The team expects the break in governance rewards to help reduce selling pressure on the token, which has recently hovered near annual lows of around $0.40.

A redesigned governance structure is set to be introduced in 2026, aiming to address past disputes and streamline decision-making before the Treasury fully reopens the following year.

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Ethereum layer-2 scaling solution Optimism is set to update its governance system for the second time this year — this time, with the intent of becoming more decentralized.

In a blog post on Friday, the Optimism team said the changes taking effect Aug. 1 as part of the “Season 8” revamp will introduce stakeholder voting, a public definition of citizenship and an auto-pass process for proposals. 

“The goal has always been to create a governance model designed for a new internet; now we understand that means lowering platform risk by creating accountability where corporate governance models have failed to do so,” the team said. 

The previous season, which lasted from Jan. 16 to June 11, was focused on interoperability.

OP governance aims to reduce platform risk

The Optimism team said it has created four stakeholder groups: tokenholders, end-users, apps and chains, to ensure all can vote on governance proposals. 

“Season 8 takes steps to ensure governance is accountable to all major stakeholders of the Collective, not just financial ones, a key weakness of traditional corporate and crypto governance models,” the team said. 

“The goal is to reduce the platform risk that any one stakeholder dominates decision making at the expense of others.” 

Citizenship still in experimentation stage 

Two houses govern Optimism: the Token House and the Citizens’ House. The Citizens House, introduced in April 2022, allows one vote per citizen. 

The Token House can vote on issues such as protocol upgrades, sequencer selection and governance fund allocation through token-weighted votes. 

Tokenholders will continue to be represented as a key stakeholder group via a token-weighted voting model in the Token House.

Optimism now also has a public definition of citizenship verifiable onchain and has subdivided it into three categories: end-users, apps and chains. 

However, the team also said citizenship “remains an experiment” at this point, and current citizenship doesn’t guarantee it in future updates. 

Proposals auto-pass unless a stakeholder vetoes

A new approval process will also take effect in August, where most will follow “an optimistic approval process,” which allows it to auto-pass unless a stakeholder vetoes.

The goal is to ensure busy contributors can still keep the system in check without full-time politics, according to the Optimism team. 

Related: ASTR becomes OP Superchain’s first interoperable token via Chainlink CCIP

“Participating in governance should not require spending hours reading forum posts and navigating complex bureaucracy. Being a governance participant should not be a full time, or part time, job,” they said. 

Resource budgets will be proposed by the budget board and passed unless vetoed as well. Protocol upgrades are going to be voted on by an independent developer advisory board, which will act on behalf of both the Token House and the Citizens’ House.

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