There’s a lot of key vocab to learn when you get into web3. (I still think “wagmi” sounds like pricey dog food.) But an important one—perhaps the most important one—is decentralization. It’s the vision behind the ecosystem, but does it work and to what degree do we want it?
This week, I’m *currently digesting* the desirability of decentralization.
Decentralization is a microcosm of a topic, so I opted to think about it through the lens of its incarnation: the decentralized autonomous organization, or DAO.
Honestly, the first time someone working in a DAO explained the operating structure, I cringed. It sounded like absolute chaos. “So everyone and anyone can do and propose anything and everything—and there are no identified decision-makers or accountability? What a shit show! This cannot work…can it?”
Let’s rewind a bit. First things first: How do we define a DAO? According to Ethereum, it’s a “collectively-owned, blockchain-governed organization working towards a shared mission.” Collectively-owned: OK, yes, love it. Working towards a shared mission: Wonderful, sign me up. But, dear readers, I’m hung up on that middle bit.
Today’s Humanized Hot Take: I think Ethereum’s DAO definition is flawed.
Blockchain—and, by extension, code—doesn’t govern. DAOs aren’t organizing numbers; they’re organizing complex human beings around the execution of ever-evolving goals. It’s a whole different ball game, and code doesn’t play it well. Code can absolutely support and underpin and execute—all critical functions—but it can’t govern per se.
That might be why governance is proving a real growing pain for DAOs. At the end of the day, DAOs are governed by humans, and we sapiens tend to like some structure. As a result, DAOs have defaulted to centralized governance mechanisms, like core teams, because they get things done. No surprise there.
If we want to deliver on that last part of Ethereum’s DAO definition—working towards a shared mission—we need to be able to work well together. In the absence of structure, self-serving actors tend to co-opt control. We’re starting to see precedent of this with the proposed dissolution of Keeper DAO, largely due to failed DAO governance.
I tried to think of a proper DAO, one where the doors are fully open, there are no core decision-makers, and everyone has an equal voice. I came up empty. The thing is, I’m not sure anything can be 100% decentralized, meaning it never has a single central authority. Someone builds something and a select group develops it; even if the masses vote on decisions, we’re fooling ourselves if we don’t recognize the organic hierarchies that arise, and ask ourselves why.
In my opinion, it’s natural. We’re not all the same people; we do not have the same goals and strengths and interests. Assuming every DAO member has comparable levels of commitment, experience, and engagement is a losing approach.
I even see this in myself: I want to play different roles in different organizations. For example, I joined Arkive to be a curious onlooker and voter; I’m not in the art world, but I want to support the organization and help co-curate the first people’s art collection. For AthenaDAO, on the other hand, I want to play an active role in its growth and success because women’s health research and access are near and dear to my heart.
I’m not seeking the same experience from Arkive and AthenaDAO. And frankly, I don’t think either can achieve its mission without some leadership structure.
I read this great thread by Chase Chapman yesterday that got me thinking about this notion of leaders and governance.
I think our best bet is to harness the positive parts of humanity, and build in ways to keep the uglier bits at bay. We try to prevent dragons from forming, all while knowing there will always be bad actors. We will have points of failure no matter what we create. But removing humanity from the building equation isn’t going to save us. Perhaps quite the opposite.
Here are my current takeaways:
Most DAOs aren’t adhering to the decentralization-maxi definition, and that’s because no one’s really nailed governance
The above seems especially pronounced when the DAO has a link to the physical world (e.g. working with physical gallery spaces or on clinical trials)
Social hierarchies will form because it’s kind of in our nature
Proper DAOs feel better fit for small-scale organizing
To actually get work done, I’m thinking we need a hybrid structure with the positive hallmarks of DAOs, like collective ownership and transparency, paired with a lean, modulable, rotating management structure that has built-in checks-and-balances
This post had my brain spinning; decentralization is so vast, and there are a lot of ways to look at it. If you’re thinking through these issues, let’s chat!
Otherwise, I’ll leave you with a question to munch on this week: How can we structure to incentivize innovation and contributions without eroding the web3 egality mindset?
PS x PSA: Web3 needs women. I got into the space via SheFi and can’t recommend it enough. Check it out. Follow along. Keep your eyes peeled for the next cohort. Write me if you have questions. It’s the best. 💫💫
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