DAOs and the pitfalls of progressive decentralisation

Although the progressive decentralisation strategy can work well in some cases, it has its pitfalls.

Linking these thoughts back to DAOs, I suspect we are now living in an age where decentralised internet communities that figure out how to organise themselves as an interdependent complex collective of diverse individuals will end up converging on better decisions. This is the next stage of social evolution. And as a consequence, these sorts of org... See more

I think a key lesson here is that economic incentives cannot, by themselves, sustain a community (because the next guy can always come along and offer more).

The decision to release Uniswap v3 with a more restrictive license suggests that, even today, Uniswap’s network effects are not something the team + investors feel comfortable relying on. In case you’re not familiar with the details, Uniswap Labs (the founding team) chose to go with a BUSL 1.1 license that prevents the v3 code from being forked for... See more

In particular, focusing on product/market fit before community may handicap you from building a fiercely loyal community, even once you have “exited” to it. An underappreciated consequence of this is that you may be forced to rely on copyright as a moat in order to continue accruing value.

As such, my thesis is that a fiercely loyal community (more on this below) coupled with effective governance (more on what this means in a follow-up post) should lead to product/market fit emerging organically from within the community.