Everyone in the cryptocurrency world has talked about Decentralized Finance (DeFi) at least once since the trend in bankless lending started growing last June. But, looking from another point of view, it really is a governance boom.
Greenfield One
And it is in this context that the launch of Greenfield One, a fledgling venture capital company that has just published a new comprehensive report on the topic of blockchain governance, takes place. Take, for example, COMP. DeFi became a hot topic the moment Compound began distributing its COMP governance token on June 15.
COMP did not introduce new features to the product, it just gave users a means to express themselves on how the $ 777 million loan protocol should evolve. The Berlin-based Greenfield One report focuses on the various aspects of blockchain governance that have led to the emergence of many yield businesses following COMP's debut.
"The [Compound] community uses a variant of liquid democracy," the report states. Despite the best intentions of the cryptocurrency founders, the Greenfield One team found that blockchain governance schemes tend to be built quickly and treated with reverence.
But sometimes that faith is misplaced. “I'm not saying teams aren't taking governance seriously, but they always seem to take it sideways,” said Greenfield One partner Jascha Samadi.
The company thought it would be helpful to have an overview of what has been tried so far. The report cites Bitcoin, Ethereum, Decred, Tezos, Cosmos, Polkadot, several DAO, MakerDAO, Nexus Mutual and Compound frameworks - here quotations official.
It also deals with describing the roles of stakeholders seen through the blockchain such as miners, validators, users, full-node operators and companies. It discusses strategies for off-chain governance and the various issues that can be addressed on-chain.
The world was not born in 2008
The cryptocurrency industry has a tendency to function as if the world was born in October 2008, when Satoshi Nakamoto published the Bitcoin white paper, but Greenfield One has realized that there is a broader literature on organizational theory that can also be applied. to cryptocurrencies.
The report opens its discussion by placing decentralized technology into a broader conversation about how humans do things together, for example across companies or nations.
"From an institutional point of view, blockchains can be seen as a new coordination technology that competes with companies, markets and national economies as institutional alternatives that organize the economic actions of groups of people," the report states.
This alternative first manifested itself with Bitcoin. But not everything Bitcoin and other cryptocurrency networks need can be solved on-chain. Hence the need for a "residual control", or a governance managed by man. As the writers note in their conclusion: "In the end, social consensus is what defines a cryptographic network."
