a16z: What can Web3 learn from the history of traditional governance?
Originally written by Andrew Hall and Porter Smith
Original compilation: PANews
Original compilation: PANews
Web3 creates a new "laboratory" for community governance, where public incentives and private incentives are intertwined, projects are also open source and for-profit, and public products and private projects can coexist. In Web3, governance is continuous, participation is fully open, and execution is swift.
Web3 governance is defined by different classes of actors, as customers are the owners. As a result, a new form of digital engagement has emerged, one with extensive experimentation and rapid iteration cycles.
However, to date, participation in Web3 governance has been low, and group decisions can easily be captured and manipulated by interest groups. To address this, we may find some lessons from the history of system governance.
While Web3 is new, governance is not. The governance challenges faced by societies and organizations have been pretty much the same over the past millennia – sprouted in the Church of Athens, where citizens came together to make collective policy decisions, arose in the Dutch East India Company, where good governance spreads risk and aggregates at scale Capital, by adding a layer of legal separation between shareholders and creditors, has enabled a whole new era of organizational design and privatized governance.
first level title
How Representation Can Improve Web3 Decentralized Governance
Some argue that representative Web3 governance is not as good as direct governance, but this is a misconception: by requiring less of community members, representative Web3 governance can actually empower them, direct and focus their activities to encourage participation and prevent Interest groups seize the system.
The same logic applies to corporate governance, as Apple will not require shareholders to vote on the technical framework for the next iPhone. Amazon also won't publicly solicit shareholder feedback on how it's executing every step of its development plan. Instead, a small group of shareholders periodically makes decisions, such as electing a board of directors tasked with exercising oversight on behalf of shareholders.
The current pain point of Web3 governance may be system complexity. We expect to see more complex and broader manifestations continue to develop in Web3 governance. From a first principles perspective, if the Web3 community needs to implement The system design and social contract formed between them requires the use of specific tools.
While Web3 governance differs from traditional governance archetypes, it can also draw from traditional frameworks to build more inclusive and efficient organizations, such as:
1. Clearly define the roles of internal units,
2. Require representatives to have certain expertise to make relevant decisions
3. Leave strategic capital allocation decisions to all members as a check on the organization itself.
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Launch the Accountability Flywheel
Representative Web3 governance can only work if it solves the principal-agent problem: representatives must want to win re-election, and community members must have the information necessary to determine whether their representatives are worthy of re-election. Likewise, in corporate governance, board members must act in the long-term interests of the company or risk being removed by shareholders, even if such removals are uncommon.
Web3 makes us think about this differently. There is no board of directors in Web3, and many participants are anonymous, and the threshold for joining and leaving the organization is very low. In general, the more informed and attentive the community members are, the more motivated the delegates will be to do a good job. And when representatives do better, stakeholders will trust the organizational system more, and are more willing to invest time and energy to pay attention to the organization, which further enhances the motivation of representatives to do a good job. The system itself can be self-reinforcing if virtuous, that is: good governance begets more good governance — what we call the accountability flywheel.
Web3 has a powerful tool to promote accountability, Token, which can be used as a new tool to distribute economic, social and political rights to stakeholders within the ecosystem, just like startups incentivize employees with ownership, Token Can be used to incentivize contributors and users to continue creating value on the network.
But relying on tokens alone is not enough to stimulate the accountability flywheel, we can also help by the following two points:
1. Encourage competent and dedicated representatives by appropriately compensating contributors and users, defining their roles, and possibly securing their tenure.
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How to express the right to speak in Web3 governance?
Those who represent token holders are often an important part of the Web3 system, but they are not the only representatives. As Vitalik Buterin pointed out in his 2016 article on decentralized governance, besides large token holders, there are many other important voices in the community that may not be included in pure token voting. Web3 governance design (one Token, one vote) has become a difficult problem to solve, because the weight of Token is usually biased towards the founding team and institutional investors, while those stakeholders who hold little or no Token are actively participating protocol.
On the other hand, non-Token holders do not bear the economic consequences of their actions, especially in an open governance system, which makes Token governance a double-edged sword. So, how to solve these problems? In fact, optimization experiments have already begun in the Web3 field, such as:
1. Distribute governance tokens directly to relevant groups.
Typical example: Anyone who makes a meaningful contribution to the protocol is tracked down and then rewarded with an airdrop.
2. Create a separate governance function.
Typical example: Optimism's "Citizen's House", which is a voting room composed of community contributors. Everyone votes through non-transferable Token, and Citizen's House will allocate funds for public goods projects.
3. Reserve some incentives for specific groups, such as full-time contributors, active forum members, or user groups.
Typical example: Currently there is no Web3 community, but this is a logical future scenario that can extend Web3 system governance beyond Token voting.
4. Empower non-token holders by other means
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A Useful Model of Web3 Governance: Indirect Responsibility
At this stage, almost all Web3 native organizations are not utilizing indirect accountability, but they should be, and there are two general approaches that can be tried:
1. Give representatives (whether appointed or elected) formal oversight powers.
This approach may be the closest to the traditional corporate governance model, but in Web3, representatives may have more power than the company's board of directors, and can require Token holders to conduct broader direct voting under appropriate circumstances.
The key supervisory power is the "power of the purse", as outlined in a traditional company constitution. In Web3 governance, this means the power to oversee the community treasury and the ability to fund or de-fund certain positions, projects, and groups within the organization.
2. Create an executive committee that will either allow representatives with the most delegated tokens to participate in governance, or allow representatives to hire full-time employees. The executive committee will be responsible for overseeing the workforce and developing a unified vision for the organization.
This model is more like the parliamentary model in Western countries, or the "parliament manager" type of municipal government in the United States.
epilogue
epilogue
Web3 is new, but governance is not.
Over the centuries, based on what we have learned from traditional governance, we have been continuously optimizing and improving, and Web3 organizations can harness the power of representation, balance expertise, and develop a better mechanism for oversight and trust.
What's more, Web3 organizations shouldn't stop there. Web3 governance can go further and faster than traditional forms of governance. In the real world, democratic experimentation is slow, and it can take decades or even centuries to figure out, for example, whether one constitutional form is better than another. But in Web3, protocols can continually experiment to develop and test new representations, driving governance cycles to become shorter.
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