The Blockchain Paradox

From ethereum's conflicted handling of The DAO attack to bitcoin's block size "Civil war," to the new staking, baking and voting models for upgrading protocols and electing delegates in more recent blockchain projects, "Governance" has long been a heated topic in blockchain communities.

As pressure for capacity upgrades has grown along with blockchain adoption, communities have struggled to find an idealized "Decentralized governance" model for agreeing on code changes and software forks.

The very idea of blockchain governance can seem like a paradox wrapped in a dilemma.

I see blockchain protocol development following a similar trajectory, with complexity growing as networks become more layered, as different consensus algorithms develop, and as different kinds of specific blockchain hardware such as hardware wallets are deployed.

While it's true that the overall blockchain ecosystem is "Not centralized" - that it lacks an overarching center of power or control - I would argue that it is already polycentralized.

How then can we also frame and simplify reasoning about the different roles, and complex interests, within a single family of blockchain protocols? For example, between bitcoin's multiple stakeholders: developers, exchange operators, full-node operators, miners and end-users.

I think it is helpful to consider blockchain transaction capacity, the blockchain itself, and other related resources such as computation power in the same vein, as CPRs. Before Ostrom's research, it was thought that the only way to sustainably steward such resources was either by establishing private property rights or with government regulation.

Though the mapping is not exact, or one-to-one, I believe it can help future researchers develop common design principles in blockchain incentive design.

They might help us ask the right questions and compare the sustainability of different blockchain ecosystems, but how does one actually measure it for a blockchain network? Here the late Bernard Lietaer has much to offer.

With their capacity to automatically enforce rules across a borderless network, blockchain protocols offer potential solutions to these deep-seated problems.