Politics in Blockchain Protocol

Politics in Blockchain Protocol

The latest edition of Bankless has focused attention on the governance mechanisms of blockchain protocols. It suggests the emerging decentralised finance (DeFi) structures are being guided by a new position of power; the “Protocol Politician.”

 

While the number of power-positions available, along with the type of rewards participants can expect to receive, vary from project to project, the author, Cooper Turley of DeFi Rate, lays out a compelling tale of what it means to be a protocol politician.

One Borderless Ecosystem

Even Decentralised Autonomous Organisations (DAOs) such as Aragon who have long sought to empower communities by removing centralised leadership still require guardians of the protocol.

As Ethereum’s Vitalik Buterin suggested back in 2014, the distinction between a DAO and a Decentralised Autonomous Company (DAC) can become quickly blurred. As the value of DAO projects increase, Buterin believes “…a large portion of DAOs are inevitably going to be DAC-like to some extent.”

By which stage, those who control the levers of governance could function more like company directors or ruling governmental ministers do today.

According to Turley’s latest article, a protocol politician fulfils three key criteria:

  • Oversees governance across specific protocols they are well versed in.
  • Participates in governance regularly to instigate positive change through new proposals.
  • Is willing to publicly vote on controversial issues and back up their votes with rational arguments.

Why would anyone want such responsibility? Because as Turley notes, “Influence has value.”

He backs up his assertion by using current U.S. congressional campaigns as a yardstick and shows how in January 2017, candidates raised around $1.2 billion from donors keen to assert influence and receive some tangible benefit.

In a similar way, protocol politicians could compete “…to build the most impactful and widely accepted governance proposals…” as well as possibly linking them “…to token incentives (which protocol politicians could share with their delegators)…”

Although still in its early days, Turley believes teams will leverage significant resources to attract as much delegated voting weight as possible “…as the revenue opportunities become more attractive.” 

Such a development is likely to have increasing impact on a global scale, especially for the larger projects, for as Turley says “…with the ability to delegate power in a few clicks across any corner of the world, we no longer compete as nations, but rather as one borderless ecosystem.”

The vision is clear for anyone looking… but concerns still remain.

For example, a quote attributed by some to Mayer Amschel Rothschild from the 1830s seems to resonate here, when he was alleged to have said “Permit me to issue and control the money of a nation, and I care not who makes its laws!” 

As cryptocurrency and blockchain technology evolves and so-called protocol politicians do consolidate power, then the ties that bind the elements of issuance, control, money and laws may become even tighter than ever before.