Governance as a Source of Value

For example, we value traditional companies based on assets and cash flows. Companies with more capital – or expected ability to absorb more capital in the future – are ideally valued more highly than others.That isn’t the case for every organization. Jacob Horne argues in his essay on “Hyperstructures” that crypto protocols built with certain trai... See more

In other words, companies are valuable when they continuously extract value for shareholders. Protocols are valuable when they continuously create value for the public. ([View Highlight](https://instapaper.com/read/1492780094/19098815... See more

---------SIGNAL VS NOISE Social governance in DeFi applications is usually coordinated through online forums and Discord channels. Snapshot applications conduct "off-chain" voting before protocol changes are encoded on the blockchain. DeFi governance evolved organically but created a lot of noise because proposals, discussions, and votes spread acr... See more

---------PROTOCOL LEADERSHIP Kain Warwick, Synthetix's former "benevolent dictator," recently explained a problem arising from the decentralized governance of Synthetix. Warwick recalls stepping away from his de facto leadership position and leaving the Spartan Council, a democratically elected body that approved Synthetix protocol changes and was ... See more

As mentioned at the beginning of the essay, protocol tokens are financially valuable in large part because of the "threat of the fee." Taking this idea to its extreme, a token’s governance power is powerful because it gives you the ability to conserve the vibes. As a builder on the protocol, you hold to help ensure that you can’t get deplatformed. ... See more

This is part 1 of a 2-part essay series on the current state of decentralized governance in crypto, followed by "Governance as a Source of Value."