Why Public Institutions be Sticky

Every project seeking to reform government eventually runs into the same brick wall…governments do not change simply because better ideas exist. For those of you interested in participating in City/Sync in any capacity (I hope you do), this will be the starting point of our design process.

We live in a world where institutions are not optimized for innovation. They are optimized for stability and legitimacy under constraint. That’s why cities keep running on legacy IT systems that should have been retired decades ago, and why bureaucracies cling to processes that frustrate nearly everyone involved. Their first mission is to reduce risk, not to pioneer novelty. If we want to reform public institutions, we need to understand that their ‘stickiness’ is not accidental, but rather the very thing they were designed for.

The economist Douglass North famously described institutions as the “rules of the game,” with organizations playing as the “teams.” These rules endure because they reduce uncertainty. Everyone knows where they stand, and if you change the rules mid-game, you change the payoff structures for every actor, and suddenly even people who support your reform in principle may resist it in practice. This is the paradox that makes reform so difficult. Uncertainty is expensive, and public agencies are structurally designed to avoid it.

Public choice theory helps us see another layer of the problem. Organized interests, whether unions, contractors, or vendors are all highly motivated to defend favorable rules. Meanwhile, the public, who may bear the costs of inefficiency or dysfunction, experiences them in diffuse ways which causes them to remain poorly mobilized. The result is a lopsided battlefield where concentrated, organized defenders of the status quo face off against the dispersed and fragmented advocates of change. If your reform threatens a revenue stream, jurisdictional sovereignty, or a bargaining chip, you can expect a sophisticated and sustained pushback, even when the public benefit is obvious.

Then there’s the survival logic of bureaucracy itself. Leaders inside agencies want budget stability, the clarity of their mandate, and, above all, the avoidance of scandal. One failed IT upgrade can end a career, while maintaining a decades-old system rarely carries the same reputational risk. That’s why large IT shifts, even when obviously necessary, are avoided. Agencies prefer incrementalism over transformation, even when incrementalism itself becomes the larger long-term risk. Reports from the U.S. Government Accountability Office have cataloged this problem for years, as critical systems written in COBOL and running on ancient mainframes remain in use because the risk of replacement looks worse than the risk of collapse.

This principle also applies to the world of procurement, which is the chokepoint through which all administrative reform must pass. Procurement represents one of the largest markets in the world, as it accounts for around 10–15% of GDP within OECD countries. 

The rules within this realm are designed to prevent favoritism and corruption, but in practice they privilege incumbents. The thresholds for qualification, requirements for past performance, insurance and bonding clauses, and contracting government vehicles are all optimized for scale and tilt the field away from newcomers. A superior product loses if it cannot navigate procurement law.

When you stack these layers together…statutes, budget cycles, unions, auditors, legacy IT, and procurement rules…you start to see why institutional reform is so sticky. And this is before you even add in the cultural weight of bureaucracy itself.  These systems will always favor compliance over experimentation.  They prefer it when pilot projects can’t scale.  Over the past few decades, governments have cultivated a culture that punishes failed experimentation but tolerates a costly status quo.

So, the challenge is not just technical. It is institutional. The obvious question becomes, how do you “defeat” incumbents ethically? How can reformers like us, working through projects like City/Sync, actually move the immovable?

The first step is reframing the objective. The word “innovation” is often a red flag in public administration, signaling risk and volatility. The language that works is “risk management.” The truth is that legacy systems already pose enormous risks. Why are we not worried about the continuity risks when the last COBOL programmer retires (lol), or the procurement risks when cities are locked into a single vendor with escalating costs, or the governance risks when records are opaque and unauditable. If City/Sync (or projects like it) can show that we can reduce those risks with audit trails, rollback capacity, and verifiable compliance, then suddenly we are not introducing risk but removing it.

The second step is to avoid the trap of a “big-bang” style replacement. We need a parallel substrate that serves as a connective backbone that can run alongside existing systems and gradually take on more responsibility. Estonia’s X-Road project offers the best template for this approach. Instead of replacing systems, X-Road created a data exchange layer that allowed agencies to interoperate without losing control of their own databases. Over time, this became the backbone of Estonia’s digital state. City/Sync’s “local chain” can function similarly…not as a new app or a single portal, but as an auditable, city-sovereign layer for decisions, records, processes, and rules.

Third, we need to borrow lessons from experiments like vTaiwan and Decidim. vTaiwan pioneered a hybrid online/offline process for deliberation, using tools like Polis to cluster opinions and identify consensus. Likewise, Decidim, launched in Barcelona, went even further by shipping not just software but a governance contract alongside it, ensuring that participation was legitimate and binding. Both show us how to build processes that give public officials political cover and citizens real input. If City/Sync can institutionalize new methods for deliberation and collective action into its dApps, upgrades become not just technical but democratic and backed by incumbent authority.

We should also recognize the power of regulatory sandboxes and challenge-based procurement systems that have been developed recently. The development of a financial and regulatory sandbox on the state level can show that new models can be tested under supervision and scaled after they prove results. Similarly, Challenge.gov (really cool, and you should check it out) has shown that buying outcomes instead of predefined products allows novel vendors to compete fairly. These are models we can replicate at the municipal level and trial them under controlled conditions before they scale. 

In fact, procurement itself needs to become part of the City/Sync product. If we don’t hand vendors a compliant procurement pathway with ready-made statements for work, evaluation criteria, and privacy we will fail before we begin. This applies to all elements that a city must consider when proposing alternative systems to lock into.  A city official who can copy-paste our documents into a council packet without months of legal review is far more likely to move forward with these experiments.  

From here, we can move forward with a more practical strategy. City/Sync should not start with contested systems that seem to align with obvious dPAN applications, like payroll or benefits disbursement. It should start with workflows that are high-visibility but low-risk.  Things like special event permits, micro-grants, participatory budgeting, and volunteerism are all processes where citizens can quickly engage, and public officials can claim credit. From there, momentum can build.

At the same time, we must engage the full coalition of public officials.  We need to engage council-members for agenda-setting, clerks for records, auditors for oversight, unions for job security, and the broader civil society for legitimacy. Without them, resistance will mount in unforeseen ways. With them, replacement actually becomes feasible. It’s not enough to have code. We need to be embedded in governance, and integrated into the process. 

Over time, the substrate can expand, and public participation dPAN’s can become normalized. When we can allow auditors to bless the logs and records, public officials to claim credit for improved outcomes, and regulators to legally recognize parallel systems…if we do that, we can start to bank our legitimacy. Once we have legitimacy, we can then move on and target core systems like municipal/vendor payments, the evolution of $CITY issuance, and multi-agency dPANs that target the more complicated collective action problems.

Success shouldn’t be measured just in adoption. It should be measured in the things that matter to residents, such as service times, state/local documentation, response speed, equitable access of neighborhoods, and broader participation rates in public-service provision. These are the KPIs that will make or break legitimacy. City/Sync can build cryptographic proofs into the logs as a method to offer verifiable assurance that the numbers are real.

So, what does this all add up to? Hopefully, a theory of change rooted not in disruption but in recomposition. We aren’t trying to blow up government. We are trying to recompose it into smaller, verifiable, participatory systems that can evolve over time.

Our focus should be building a counter-coalition with concentrated, visible benefits, while spreading the costs thin enough that resistance cannot sustain itself. We need to be able to edit the rules of the game without stopping play. In Ostrom’s words, we need to be seeking a polycentric governance system where many centers of decision-making balance each other, all while making the whole more resilient.

Public institutions are sticky because they were built to be. But stickiness is not permanent. If we can out-coordinate the status quo and prove safety to auditors, legitimacy to citizens, compliance to regulators, and offer political capital to public officials, we can shift the gravitational pull away from the power centers of administrative authority. City/Sync doesn’t need to “disrupt government”. It just needs to become the decision backbone for a new era of civic coordination.

And if we get that right, the very thing that once made reform impossible, the stickiness of institutions, becomes our greatest ally. Because once the new system is in place, it will be just as hard to undo as the old one ever was. 

If the stickiness of public institutions is our starting point, then the design choices behind City/Sync must be judged not by their technical ease but by their institutional plausibility. This is where the decision to prioritize local sovereign chains over applications deployed on global, permissionless networks like Ethereum becomes essential. The argument is not about decentralization…it is about institutional adoptability.  There are many reasons I think the initial proposed architecture is justified.  

The first and most obvious reason is legal compliance. Public institutions cannot run their core processes in environments that sit outside of their jurisdictional reach. Archiving, records retention, freedom of information requirements, and GDPR-style privacy protections are statutory obligations, and cannot simply be optional features. A city council cannot tell its auditors, “the chain decided otherwise.” If we provide cities with their own sovereign chain, it ensures that compliance is engineered into the substrate itself, and not left as an afterthought in middleware.

Second, there is the matter of how we frame security and risk. Ethereum is designed to resist adversarial global threats, but that resilience comes with exposure to onchain dynamics like MEV extraction, network congestion, unintended upgrades, and spam attacks. Governments do not want to play in adversarial sandboxes. They want bounded and predictable environments. A local chain, validated by a consortium of nonprofits, agencies, and trusted civic organizations can narrow the attack surface and transform decentralization into something auditors can understand, by placing some level of accountability on a known validator set.

Third, there is economic predictability. Public budgets are written years in advance. No procurement officer is going to sign off on systems whose costs depend on speculative fluctuations in the price of ETH, for example. Local chains remove this barrier by offering gasless transactions and a stable, narrow token set ($USDC for funding, $CITY for engagement, $VOTE for governance, etc.). For the first time, blockchains can speak the language of municipal finance officers by providing a predictable model for fixed costs and no hidden volatility.

Fourth, practical processes for procurement must be taken seriously. “Deploy it on Ethereum” is not a category a city can buy. It cannot be written into an RFP, nor does it define liability when things go wrong. A local chain, however, can be wrapped in ready-made procurement templates that authorize statements of work, compliance addenda, evaluation criterias, and a chain of custody through a trusted set of interactions and institutions. It gives procurement officers something tangible they can insert into a cities agenda with clear guardrails for accountability. By configuring the design of the chain, we can create infrastructure that also serves as a contract-ready product.

Fifth…you can’t ignore political optics and trust. Citizens will not look kindly on their governments outsourcing essential functions to a global network run by anonymous actors. It just won’t happen (in the short-term).  Even if the technology is sound, the perception will be one of surrendering sovereignty. A local chain avoids this trap by making the governance visible and proximate. Validators are local nonprofits, universities, agencies, and other organizations that are run by people who are known and can be addressed. They can find comfort knowing that their data remains under local jurisdiction. Your governance, your records, your rules.  

Sixth, we must consider interoperability on public-sector terms. Governments do not want to be locked in silos, but neither do they want to be swallowed into global protocols they cannot influence. Local chains strike a healthy balance in my opinion. While it’s not what I want, it’s a necessary antecedent for getting us there. Local chains allow for interoperability through bridges when needed for things like regional cooperation or citizen mobility without governments losing their discretionary authority. Local chains can mirror the structure of federalism itself.

Finally, there is the matter of institutional resilience which we’ve already discussed. The essay has already shown why institutional resilience makes reform difficult. But this resilience can also become an ally if the new substrate is the one that gets embedded. A city-specific chain, designed around its laws, validators, governance processes, etc…becomes resilient by design. Once adopted, it is not easily undone. This is exactly the kind of durable infrastructure reformers should want.  We don’t need fragile pilot projects that fade away, but hard-to-reverse substrates that persist across political cycles.

Taken together, these arguments show that the choice of local sovereign chains is not a matter of taste. It is the only viable way to reconcile the technical promises of blockchain with the institutional realities of government. Public agencies need legal compliance, risk reduction, cost predictability, procurement clarity, political legitimacy, controlled interoperability, and lasting durability. Ethereum dApps may maximize theoretical openness, but local chains maximize practical adoptability. And in the context of reforming public administration, adoptability is the only currency that counts.

City/Sync: Recomposing Government Legitimacy

Justifying the proposed architecture of City/Sync

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