Governance as a Source of Value

My hope is that in our current paradigm where capital is abundant and people pay millions of dollars for JPEGs of rocks, social value - as measured by the impact our actions have within a larger system - will displace monetary value as the primary pursuit of economic actors

Decentralized governance implemented through DAOs encourages open participation in the development of the DeFi industry. By either purchasing or earning governance tokens, actors not only have the opportunity to share in the risk and reward associated with the monetization of a new financial system, but also the incentive to define the economic and... See more

In one of my favorite essay's on the subject, pseudonymous crypto researcher Hasu states, "The bitcoin token itself has no value. The value exists purely on the social layer." While blockchain technology adds credibility through programming and automation, the social layer determines the rules of bitcoin the blockchain, which ultimately gives bitco... See more

Burniske warns, "Markets are a powerful technology that is meant to serve society's virtues, but markets are dangerous as a virtue system in-and-of themselves. If we continue to allow markets to dictate our virtues, we will perpetuate a society that the majority now whisper is selfish, divisive, imbalanced - threatening, even." With everything in o... See more

The word "value" can refer to the price or meaning of something, or more generally, to that which is morally cherished. As a result of this ambiguity, in his book, Toward an Anthropological Theory of Value, David Graeber presents three interrelated schools of thought around value: economic, sociological, and linguistic.

In this essay, I introduce three theoretical perspectives from which we can view the term "value" and how they relate to cryptoassets. In addition, I discuss how the power granted by governance tokens confers value. Lastly, I propose governance power as a new fundamental metric in token valuation that can be measured by a "governance premium" assig... See more

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 most successful projects will inevitably be those that leverage the full functionality of this new asset class to produce products and services that generate the most utility for the widest set of stakeholders.

Many cryptoassets today, particularly those within DeFi, also grant holders claims on a portion of protocol cash flows. This gives the tokens very quantifiable value, which can even be modeled by discounted cash flow analyses favored by traditional financial institutions. However, this has left many to wonder whether "pure" governance tokens, which... See more