Decentralization: this is a word that has so much power and promise. But over the years, it has become painfully clear that this concept doesn’t get the respect it deserves – and the consequences can be downright dangerous.
We live in a world where DAOs are not DAOs, where independent validators are not independent, and where public relations departments ignore the fact that some blockchain projects are much more centralized than there is. appears.
Emotionally and financially, countless crypto enthusiasts have joined decentralized projects – confident that these platforms will bring about change and hope they could make a lasting contribution that would make the world a better place.
In September, Glassnode questioned whether Uniswap was as decentralized as it looks. A “huge proportion” of the total UNI token supply, 40% to be exact, has been allocated to the platform’s teams and investors, and the only entity with enough UNI to submit a governance proposal is Binance, a centralized rival. Glassnode then accused the Uniswap team of “somewhat misleading” marketing, adding, “The story of a shift to decentralized community ownership seems somewhat spurious.”
And in March, the so-called decentralized Steem blockchain fell victim to a “hostile transfer” from Tron founder Justin Sun. A major player, Dan Hensley, accused Sun of bribing his way to the top of Steem with “money, power and users” – and went on to say his dominance “had turned Steem into a security centralized ”.
Enough is enough.
Lessons must be learned
To understand why the facade of decentralization can be downright dangerous, here is a concrete example.
On a boat in the middle of the Nile 10 years ago, I proposed to my girlfriend. She said yes. We returned to the UK, eager to return on holiday to Upper Egypt.
Soon after, the failed Egyptian uprising began. My experience as a journalist, mixed with the paranoia of the authoritarian government of the country, made the return too risky.
At the time, pro-democracy protesters – who were mostly young, secular and ‘connected’ – trusted social media platforms and messaging apps, believing they were decentralized enough to give them a fair hearing and an accurate view of what was going on in Egypt.
Their faith turned out to be misplaced.
Before their movement was crushed, I actually wrote an article about this exciting use of technology – comparing it to centralized state-controlled broadcasters. I had been naive: Twitter and Facebook turned out to be centralized organizations like any other. These platforms quickly turned into tools of repression, censorship, and propaganda by the various forces operating in Egypt (including the military, Islamist extremists, and foreign powers). ISPs turned user data over to the government, Facebook admins and posters lost their freedom, and some lost more than that.
The Internet was born free, but decisions made by companies have infected this revolutionary technology through centralization. Since then, several decentralized blockchain networks – Ethereum among them – have suffered a similar fate.
Lessons must be learned. We now know that decentralization can decrease over time unless the problem is tackled head-on. The only way to do that is to wire the principle of decentralization into the blockchain itself … from day one.
What decentralization should look like
After years of broken promises and disappointments, it’s no wonder the sense of decentralization has been lost. Crypto enthusiasts have had to manage their expectations and be content with the drawbacks of current governance models.
We need to take a step back and recognize that deep gaps exist in the way many blockchains are set up. These loopholes, which often sow inequity and lack of transparency, drag us into the centralized world we are trying to avoid.
Take the example of subsidies. At first glance, these programs have the potential to spread wealth and influence within a community – but take a closer look, and you start to see things in a different way.
As Lane Rettig recently wrote, grants are often very centralized. Founders use them to promote existing programs, and funds tend to go to people they already know and trust. This can be breeding ground for prejudice and nepotism – and means that blockchain’s unique selling point of ‘permissionless innovation’ is wasted. He highlighted how some of the largest grants given by the Ethereum Foundation had been awarded to close friends of Vitalik Buterin, adding, “I have yet to see a well-run grants program in the blockchain space.”
It doesn’t have to be that way. What if contests were held instead? This would ensure that everyone in the community can have a say in how funds are distributed – creating a meritocracy where tokens are awarded based on talent, not connections. The results of the vote would be recorded on the channel, which means that any conflict of interest would be easier to detect. Better yet, it would make engaging in a community much less intimidating. The quietest people in the room often have the best ideas.
Concerted action to end the creeping threat of centralization in its tracks does not stop there.
The funds required to get involved in staking can often be prohibitive. And when an individual puts tokens with a validator, it can mean that he loses the right to vote as he pleases, as the validator will make decisions on his behalf. But what if all of these individuals retained their voting rights during the staking process, thus preventing the concentration of power in the hands of a few?
And there is more work to be done. Decentralized governance only works if it is truly scalable. If a network collapses because 100, 1,000, or 1,000,000 people want to participate, the game is over. Blockchains must be built with large-scale messaging in mind and must be able to cope with a high throughput of secure transactions – enabling large-scale votes and contests to be held in real time.
Finally, there must be adequate incentives for long-term participation. Sub-governance groups are essential here, as they can give individuals the freedom to build their experience and reputation in the areas they value most. Passionate about social media strategy? There is a group for that. Fascinated by the way the node cores are maintained? This will be the second door on the right.
Once people see that a successful combination of decentralized governance and decentralized money is possible, there will be no turning back – and blockchains that simply have the veneer of decentralization will have hard questions to answer. .
I hope it is only a matter of time before this new way of cooperating, free from central control, hierarchy or manipulation, reaches people in all countries – including Egypt.
The views, thoughts and opinions expressed herein are the sole ones of the author and do not necessarily reflect or represent the views and opinions of TBEN.
Sharif Sakr is a former TBEN and Engadget reporter who now works as a product management specialist for blockchain investment fund BR Capital, and teaches product management workshops at the University of Oxford. He is an initial launch member of the Free TON community.