Arweave TX
Last month's most iconic news was Julian Assange's release. Next, we should perform a habitual action and question the whereabouts of the funds. Assange's legal defense was primarily funded by AssangeDAO, which raised 16,593 ETH. The funds were raised by auctioning NFTs, with proceeds going to the Wau Holland Foundation. Currently, AssangeDAO member Silke Noa is requesting the foundation to make the expenditure details public following Assange's release.
Turning to crypto governance, the first point of attention is the swift expansion of bureaucratic systems in the crypto world over the past year. The growth of the bureaucratic system is tied to representative and committee systems within crypto projects, creating a self-reinforcing loop. "Code is law" is diminishing, whereas the proportion of human intervention in rule-making and influencing regulations has significantly increased, particularly over the past year.
First, the representative system fosters a group of professional legislators/delegates. In actual operation, public proposal voting in DAOs is propelled by the consensus of this legislative class. In other words, the consensus of the legislative layer oversees the entire agenda, with the voting results decided by the consensus of the legislators. They actively engage in discussions and setting agendas, self-validate their achievements, and possess both external conditions for gaining power and self-motivation to expand it. This power concentration is growing, as evidenced by recent events:
Arbitrum Foundation proposed a new transaction ordering mechanism with 0ms delay (auction) and 200ms delay (regular) channels, with auction revenue either entering the treasury or being burned (to be discussed). Burning directly affects the price performance; while entering the treasury, the revenue will be allocated through proposal voting, giving legislators/delegates more sustainable power to distribute the budget
Tally's Frisson proposed that Arbitrum distribute 50% of sequencer fees to token stakers who delegate voting power to active delegates. The influence of active legislators, or those still engaged in the legislative circle, will undoubtedly grow further.
Simultaneously, crypto's unique ideology ("decentralization") naturally fosters inherently committee-based governance. Crypto enthusiasts inherently believe there should be no central authority, thus naturally embracing a flat structure of nested committees. Unlike the hierarchical systems typically used by companies and governments, a committee in a crypto project is formed for each issue, with numerous committees managing various nuanced domains of community authority. The allocation of responsibilities and power within the committee system lacks a top-level design, leading to the continuous formation of new committees to address new issues, with old committees seldom disbanded. Committee systems provide a path for professional delegates to gain administrative power, notorious for their inherent opacity and inefficiency due to blame-shifting.
Optimism's new Grant Committee structure, comprising four sub-committees (two grant committees, an audit committee, and a post-grant data oversight committee), exemplifies this trend. While the structure appears more organized, it expands from a 5-person committee to potentially 20 members, justifying future expansion.
Professional delegates also face conflicts of interest. In the crypto world, they often serve multiple projects, soliciting votes across platforms. This multi-project involvement complicates interest alignment and accountability. For example,
Gauntlet had served as Aave’s risk manager for four years, but after cutting ties at the beginning of the year, it then partnered with Aave’s competitor, Morpho. Gauntlet's community governance and political involvement were already notably low. The newest group of professional legislators earn tokens mainly through "talk," by posting on forums and exchanging minimal effort for substantial and sustainable tokens, along with control over their areas of responsibility.
Legislators hold positions in multiple projects, and the cost of acquiring tokens is not commensurate with the responsibilities they are expected to undertake. However, a good example exists:
Cow DAO's council nomination standards, requiring nominees to hold at least 10,000 tokens and self-delegate. Though this amounts to only $2,000-$3,000, it's an improvement over most protocols' lack of clear nomination thresholds.
The confluence of these 3 factors results in a budget black hole for the community treasury:
Representative systems ensure delegates' legislative power.
Committee systems obscure the fact that legislators also hold executive power.
Delegates' interests fundamentally misalign with projects, incentivizing power expansion over community representation.
This trend represents the rapid techno-cratization of crypto governance. While bureaucratization currently signals progress from previous chaos, it's crucial to recognize its pitfalls and work towards more effective, aligned governance structures.
Crypto governance has an unavoidable trend wherein governance will essentially become open to everyone. It is essential that we surmount these challenges and establish principles of public cooperation, thereby averting a scenario where the zero-sum game of organizational resource allocation incites conflict between well-intentioned parties, leading to divisiveness and mutual critiques of ethics and motives.
The second issue concerns organizational "justice" - principles for allocation and division of labor. Sometimes, ideological drives in the crypto world lead to situations where those who do more get less, while those who shout slogans get more and do less.
Optimism's retroactive public goods funding criteria has been criticized for potentially rewarding rhetoric over substantive contributions. Critics argue that projects with minimal original code but support for open-source could receive rewards, while those providing significant liquidity(50%+) but with partially closed-source code(10%) might not.
The "Impact = Profit" standard, defined by Citizens' House badge holders, faces criticism for its allocation method. It reduces OP allocations by previous OP grant amounts but not by other funding sources(i.e. VC, other projects' grants), leading to potential inconsistencies. This, along with the standard's definition of impact, has faced criticism from delegates. The situation highlights issues with the two-chamber system, where Citizens' House members, holding no tokens, lack direct constraints and rely solely on general moral intuitions for decision-making.
We recommend two articles:
Palladium's "How Late Zhou China Reverse-Engineered a Civilization" discussing how ancient Chinese philosophies deconstructed historical experience to create new social solutions.
An interview with Amir, noting the need to view his revolutionary portrayal critically while appreciating insights into the mindset of native inhabitants of free technology societies.
A clear political event has preceded every exponential economic growth in history. Similarly, large-scale economic/commercial growth cannot be sustained without political infrastructure paving the way. The social technologies being contemplated and built by figures like Amir (and ourselves) may well influence the next generations' social civilization, laying the groundwork for the next wave of large-scale growth.
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