Decentralized Governance Structures

Decentralized governance is at the heart of the ideological foundation of crypto: equal participation for all actors. The playbook of progressive decentralization is being followed by more decentralized finance (DeFi) projects. Users and tokenholders can now have more control over protocol parameters, treasury spending, and, in general, the industr... See more

Resolve principal-agent dilemma of organizations: Distributed ledgers also provide a global coordination tool for new types of decentralized and sometimes also autonomous organizations (read more: Part 2 - Institutional Economics & Governance of DAOs).

While I do not believe the only, or even the best, mechanism to implement decentralized governance process is through a one-token-one-vote scheme, I do believe that the token model is effective at translating social values into economic outcomes.

‘The optimal governance structure for early-stage projects is founder dictatorship. The optimal governance structure for mature projects has large user/stakeholder involvement. “Exit to community” continues to be underrated as a way to get both’. - Vitalik Buterin

---------CONCLUSION DeFi's decentralized governance allows stakeholders to influence protocol development. Decentralized governance with DAOs can replace traditional firms' transaction costs, allowing crypto projects to welcome more diverse ideas and beliefs. To achieve these benefits, operational efficiency does not have to be sacrificed. Incorpor... See more