When the decentralized giant sails into the deep sea, the navigation efficiency and decision-making agility of a single mothership face unprecedented challenges. Imagine a vast interstellar federation where all decisions must be voted on by a central council; how inefficient would exploring new star systems and establishing trade stations be? This is the dilemma faced by many large decentralized autonomous organizations (DAOs). To maintain vitality and expansion in the vast Web3 universe, they begin to incubate countless small and refined "interstellar exploration teams"—known as SubDAOs. These subordinate autonomous units, like small spacecraft dispatched by the mothership, each carry specific missions and head into different unknown territories. However, this raises a core question: what is the legal relationship between these “exploration teams,” which have independent routes and decision-making powers, and their “mothership”? How can a governance framework be constructed that both authorizes autonomy and maintains overall coordination?
The rise of SubDAOs is essentially an inevitable product of the scaling and specialization of DAO governance. They are no longer just simple on-chain multi-signature accounts, but rather micro-autonomous entities with independent treasuries, member systems, and specific functions. For instance, a DAO of a large DeFi protocol might establish a SubDAO for a specific product line (such as lending pool management), a specific market (such as expansion in the Asian community), or even a specific tech stack (such as Layer2 integration). Its core technical mechanism is often based on the authorization and delegation of smart contracts: the main DAO allocates funds to the treasury of the SubDAO's smart contract through voting and grants it decision-making power within a specific scope, such as deploying contracts, managing funds, initiating proposals, etc. This is akin to the main DAO minting a "delegation badge" for the captain of the space exploration team, allowing them to independently exercise authority within a specific star domain, but their range of action and resource limits are constrained by the "charter" of the mothership. We can envision a streamlined diagram: the main DAO at the top, connecting multiple SubDAOs below through an "authorization protocol" smart contract. Each SubDAO has its own independent on-chain treasury and voting module, but its key decisions or actions beyond the scope of authorization still require the approval of the main DAO, forming a hybrid governance model of "on-chain authorization, off-chain coordination."
From a market positioning perspective, SubDAO is a powerful tool to solve the "bloat syndrome" of large DAOs. By December 2025, we expect to see more and more established DeFi giants like Aave DAO and Compound DAO actively exploring or piloting the SubDAO model to enhance decision-making efficiency and ecological vitality. For instance, a specific Aave SubDAO might focus on assessing the risk parameters of new collateral without requiring the entire Aave community to engage in lengthy discussions about every detail. This decentralized autonomous model gives it a unique advantage in the Web3 competitive landscape: first, the **efficiency revolution**, with shorter decision chains and quicker responses to market changes; second, **specialization deepening**, where each SubDAO can attract and retain experts in specific fields, forming highly focused knowledge communities; third, **risk isolation**, theoretically ensuring that the failure of one SubDAO does not directly cripple the operations of the main DAO, similar to a space exploration team encountering unforeseen circumstances without affecting the overall safety of the mothership. However, its disadvantages are also apparent: **governance fragmentation** may lead to increased communication costs, and the risk of **power rent-seeking** arises, as individual SubDAOs might deviate from the main DAO's vision, potentially leading to fund misuse.
In terms of economic models, the operation of SubDAOs typically relies on funding allocations from the main DAO or their own token economic incentive mechanisms. The main DAO may periodically allocate part of the protocol revenue or treasury funds to SubDAOs as a budget for their operations and incentive contributors. In more advanced models, SubDAOs might even issue their own governance tokens or create independent economic cycles for their specific activities through methods like "yield farming." For example, a SubDAO focused on a specific NFT field might generate revenue by selling curated NFTs and use this income to incentivize its community members while sharing a portion of the profits with the main DAO. This dual or multi-layer token economic design aims to align the short-term goals of SubDAOs with the long-term vision of the main DAO through economic incentives. The key lies in how to design the distribution mechanism to ensure that the growth of SubDAOs can feed back into the value capture of the main DAO, avoiding internal "zero-sum games." We observe that in the treasury asset management of some leading DAOs, the "sub-funds" or "special allocation quotas" specifically reserved for SubDAOs are growing year by year, reflecting the emphasis on the economic independence of SubDAOs.
In terms of ecological development, SubDAO is spawning a series of new tools and services. For example, a modular governance stack specifically for the creation, management, and coordination of SubDAOs is emerging, offering more convenient proposal, voting, fund management, and member management functions. Meanwhile, with the increasing number of SubDAOs, how to effectively coordinate cooperation between different "space exploration teams" and avoid resource overlap and duplication of efforts has become a new challenge. Cross-SubDAO communication protocols and collaboration platforms, as well as a "meta-governance" framework capable of aggregating contributions from different SubDAOs, will be important development directions in the future.
However, the legal relationships and governance frameworks of SubDAOs still face many challenges. **Legal ambiguity** is the primary issue. In most jurisdictions, SubDAOs do not have a clear legal status. Are they departments of the main DAO? Independent legal entities? Or merely a set of smart contracts on-chain? This directly affects liability attribution, tax treatment, and interactions with the traditional world. If a SubDAO enters into a contract with a third party or triggers legal disputes due to its actions, how will liability be traced back to the main DAO or its members? Next is **governance games**. When conflicts of interest arise between the main DAO and SubDAOs, how will arbitration be conducted? Does the main DAO have the final veto power, or can SubDAOs act completely independently? This requires a clear on-chain upgrade path, emergency rollback mechanisms, and off-chain dispute resolution processes. Finally, there are **security risks**. If the authorization for the SubDAO treasury is poorly designed, it could become an attack vector, and there might even be cases of "team betrayal," maliciously transferring assets authorized by the main DAO. Therefore, strict permission management, multi-signature thresholds, and time lock mechanisms are crucial.
To address these challenges, I recommend that for the main DAO, it is essential to clearly define the scope of authority, capital limits, reporting cycles, and exit mechanisms at the inception of creating a SubDAO, and to write these into auditable smart contracts. At the same time, exploring hybrid legal structures, such as establishing a regulated "umbrella foundation" or "Limited Liability DAO (LLA)", can provide a layer of legal protection for SubDAOs. Teams wishing to create SubDAOs should have a deep understanding of the main DAO's governance charter and actively seek off-chain legal counsel to clarify their legal status and potential risks. For ordinary Web3 participants, when choosing to join a SubDAO, in addition to focusing on its vision and economic incentives, they should also examine whether its governance contract with the main DAO is clear and transparent.
Looking ahead, I expect that by 2026, we will see more innovative "Legal Wrappers" solutions emerge, aimed at providing clearer legal frameworks for both main DAOs and SubDAOs. At the same time, AI-assisted governance tools will be more widely applied in SubDAOs, helping them analyze proposals, predict voting outcomes, and even identify potential conflicts of interest. SubDAOs will no longer be a single structure but will form a multi-dimensional, layered "digital organism" that collectively drives the expansion of the boundaries of the Web3 ecosystem. This requires us to take a grander vision, effectively combining the decentralized advantages of on-chain governance with the certainty of off-chain law.
Consider this: does your DAO also need a group of "space exploration teams" with a clear mission, yet closely connected to the mothership, to explore the unknown stars and seas?
This article is an independent analysis and does not constitute investment advice.
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