Spark CEO Sam Macpherson makes the case for sub-DAOs as a governance fix

If you’ve ever tried to get 10,000 anonymous token holders to agree on a lunch order, you have a rough idea of what governing a major DAO feels like. Sam Macpherson, CEO of Spark Protocol, thinks he’s found a better way: stop trying to make everyone agree and let competing teams fight it out instead.

Macpherson’s pitch centers on the sub-DAO model, a governance architecture where the core protocol sets the rules but delegates actual operational decisions to independent sub-organizations. These sub-DAOs then compete with each other to deliver the most value back to the parent.

Why flat DAOs break

Macpherson has been flagging issues with flat DAO governance since 2021 and 2022, back when MakerDAO (now rebranded as Sky) was still operating under its original structure.

In a flat DAO, every major decision goes through the same governance bottleneck. Token holders vote on everything from protocol parameters to marketing budgets. The result is predictable: slow decision-making, voter fatigue, and the emergence of political factions that spend more time blocking each other than building anything useful.

Macpherson’s diagnosis is that factionalism in DAOs isn’t a bug to be eliminated. It’s a feature to be channeled. The sub-DAO model doesn’t suppress political competition. It gives it a productive outlet by letting different teams operate independently and prove their worth through results rather than governance votes.

Under this framework, the core DAO (Sky, in this case) establishes high-level rules and maintains the protocol’s foundational infrastructure. Sub-DAOs like Spark then handle the messy operational work: running lending markets, managing risk, deploying capital.

Spark’s track record as proof of concept

Spark Protocol launched as a sub-DAO within the Sky ecosystem in 2023. The protocol operates Aave-style lending markets, recycling assets through pools where borrowers and lenders match up in a permissionless environment.

Spark’s deployed capital reached $3.6 billion in 2025, with projections exceeding $5 billion in 2026.

The operational autonomy is the key ingredient. Traditional DAO structures would require governance votes for the kind of rapid decision-making that lending markets demand. Interest rate adjustments, collateral parameter changes, risk management calls: these need to happen quickly, sometimes in response to market conditions that shift within hours. A sub-DAO with delegated authority can move at the speed the market requires.

The Endgame framework and what it means for DeFi governance

Spark doesn’t exist in isolation. It’s part of the broader Endgame framework that Sky (formerly MakerDAO) has been rolling out, a restructuring plan that envisions multiple independent sub-DAOs competing within the same ecosystem.

The logic is borrowed from market economics. If you have one team managing all lending operations, you get a monopoly with monopoly problems. If you have several sub-DAOs competing for the same pool of collateral and users, you get pressure to innovate, cut costs, and deliver better products. The core protocol benefits because it draws from whichever sub-DAO is performing best.

Rather than a single governance body trying to optimize everything simultaneously, the Endgame model lets specialization emerge naturally. One sub-DAO might focus on conservative lending strategies with blue-chip collateral. Another might push into riskier markets with higher yields. Users and capital flow toward whoever delivers.

A sub-DAO that underperforms can be replaced or defunded without requiring a complete governance overhaul of the parent protocol.

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