By now, you will have hopefully thought about blockchain and one too many DLT startups trying to change the structure of this world. Now, people rightfully criticised that there is a gap between keynote presentations of startups and their actual implementation. On chain governance is still poorly explored and for every genuinely innovative ‘natural identity based quadratic voting’ proposal or DAO building block, there are a hundred (enter alternative arbitrary number) DLT systems that are already governed by a small elite (when PoS with pure ‘per token’ voting are also used for governance votes). Blockchains are thus not inherently decentralised. In general, it is necessary to further define this fuzzy concept that is commonly found in shiny whitepapers, yet not so often defined or even measured. There are valid concerns that the meaning of the term ‘decentralised’ got conflated. Next to the physical distribution of hardware it usually reflects a decentralisation of power. This latter term is difficult to measure and contingent on the various subsystems (think of mining pools, core devs, etc). Proposals such as the Minimum Nakamoto Coefficient try to quantify exactly this, but run risk of providing an illusion of measurability.

This, however, is similar to democracy. Decentralisation does not exist on a binary base, but a scale and can be continuously strived for. There just needs to be enough decentralisation, whatever ‘enough’ may turn out to be. In the words of Polanyi — the ability to bring the government under the control of a democratic citizenry is crucial to define a moral economy.

This already leads to the first major takeaway — blockchain as a petridish for social governance. DLT created a unique ecosystem with multiple personas having a real stake, as in something they perceive as valuable, in a network. Different realisations of governance design will show what works and what wont. Some might work, some might fail, but all will influence our current understanding of governance. But why do we actually need decentralisation in governance? By phrasing the question like this it becomes more obvious that decentralisation fulfils a certain function.

Amongst other things it diminishes the risk of single point of failures and is thus a control to power abuse.

With this understanding and a focus on DLT’s legitimising factors and core assumptions underpinning the whole crypto ecosystem, it becomes more obvious how different the crypto ecosystem is and how natural its emergence was.