Stephanie Hurder, a CoinDesk columnist, is a founding economist at Prysm Group, an economic advisory focused on the implementation of emerging technologies, and an academic contributor to the World Economic Forum. She has a PhD in Business Economics from Harvard.
If you follow our writing at Prysm Group, you know one of our mantras is that governance is essential for the long-term survival of blockchain projects. Blockchain projects are complex technical and economic systems that require a systematic and architectural approach to design. Governance enables blockchain projects to continually innovate, upgrade their protocols and adapt to changing market conditions while maintaining the desired level of decentralization.
Blockchain governance design has faced a steep learning curve. I have described the evolution of blockchain governance design since 2018 as having three eras:
- Era 1: Informal/ad hoc governance design. The original blockchain projects, such as Bitcoin and Ethereum, had no formal governance. Decisions regarding upgrades and crises were made by developers and other influencers based on ad-hoc procedures.
- Era 2: Copy and paste governance design. Realizing that projects need well-specified decision-making procedures to succeed, projects copied and pasted voting and proposal mechanisms from other, non-blockchain platforms.
- Era 3: Bespoke governance design. Projects realized blockchain is a new and distinct environment and began to design systems ground-up based on first principles.
After a briefing I gave two weeks ago jointly with Mark F. Radcliffe, Partner at law firm DLA Piper, I believe we have entered Era 4: the era of systemic governance design. Systemic governance design also takes a ground-up approach based on first principles while explicitly considering the ways in which a project’s governance must be designed to work in harmony with the governance of other projects in the blockchain ecosystem.
And this era, unlike the previous three,…