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The Web3 Decentralization Debate Is Focused on the Wrong Question

Jan 10, 2024, 7 min read

The Web3 Decentralization Debate Is Focused on the Wrong Question

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Metadata

Highlights

  • We believe decentralization’s value is in genuinely empowering people to act decisively within their social contexts, while providing mechanisms of necessary coordination across contexts. This is in contrast to the current technical landscape, where decisionmaking agency over information, computation, moderation, and so on is increasingly in the hands of authorities “distant” from the relevant groups—for example, platform content moderation processes try to be cross-community and cross-cultural, and largely fail at both. In this situation, decisions are removed from the context of application and made by people with little direct interest in the matters, who are then unable to take advantage of rich distributed information.
  • Our view of decentralization is about coordination. It emphasizes solving problems through the federation of “local” units, clustered around the social contexts most relevant to the decision at hand. This is not a new idea: US federalism, with local, state, and national governments, essentially pulls from this principle of subsidiarity, as does the setup of open source code repositories and wiki-like structures for information aggregation. The key is that these local units are composable—modular and interoperable with each other, essentially “stackable” to a more global scale—to enable decentralized systems to efficiently solve problems that may at first blush seem to require centralization for coordination. We call this model composable local control.
  • Subsidiarity is the architecture and type of decentralization that makes composable local control possible. But the dominant trajectory of Web3 is unlikely to deliver, and may even run contrary to, subsidiarity.
  • Theoretically, redundancy aims for security against attack. Yet, as we have seen play out in both recent supply chain challenges and the concentration of most Bitcoin mining into a small number of mining pools, market efficiency tends to concentrate activity in hyperscale centers, often highly brittle to shocks and disruptions (e.g., local Covid lockdown policy) or located in jurisdictions (e.g., China and Russia) that may be vulnerable to geopolitical risks. Effective and secure redundancy requires deliberately compensating for this tendency, choosing diverse “hedges” against risk rather than simply the lowest-cost providers. But achieving such hedging requires tracking locality and network relationships that these purely financial systems ignore.
  • In sharp contrast to these principles, the type of decentralization that we believe is desirable, subsidiarity, focuses on:Keeping data as close as possible to the social context of creation.A plurality of solutions linked and integrated through coordinated mechanisms of federation and interoperability.Leveraging and extending relationships of online and offline trust and institutions.
  • Unlike distributed redundancy, subsidiarity often increases efficiency by leveraging trust, rather than reducing efficiency to eliminate the need for trust. Take something like community mesh networks, through which communities bootstrap decentralized wireless networks through shared nodes and antennae, installed locally. Creative economic incentive design is crucial for the sustainability of such networks, but these incentives are embedded in social relationships, rather than acting as a replacement for them. Similar principles underlie recent, blockchain-based alternatives, which we welcome.
  • Most data are relational (e.g., emails between people, genetic data partially shared by families, social graph data), so private property conceptions fail. If any individual can block transactions, data becomes unusable; if any can authorize transactions, a race to the bottom results as each data holder tries to sell out ahead of others.
  • For example, a credit union could function as a data steward for member data, and exchange only particular insights with a startup building a tool for loan refinancing or with a public sector agency aiming to improve financial policy, keeping the underlying data private while adding value to the ecosystem and rerouting benefits to members. Such a steward could further interoperate with a network of other credit unions for better leverage and benefits. A similar structure could be used for needs as diverse as Covid-19 contact tracing or tracking carbon emissions, unlocking massive public benefits while still protecting individual and community decisionmaking.

--- title: “The Web3 Decentralization Debate Is Focused on the Wrong Question” author: “wired.com” url: ”https://www.wired.com/story/web3-blockchain-decentralization-governance/” date: 2023-12-19 source: hypothesis tags: media/articles

The Web3 Decentralization Debate Is Focused on the Wrong Question

rw-book-cover

Metadata

Highlights

  • We believe decentralization’s value is in genuinely empowering people to act decisively within their social contexts, while providing mechanisms of necessary coordination across contexts. This is in contrast to the current technical landscape, where decisionmaking agency over information, computation, moderation, and so on is increasingly in the hands of authorities “distant” from the relevant groups—for example, platform content moderation processes try to be cross-community and cross-cultural, and largely fail at both. In this situation, decisions are removed from the context of application and made by people with little direct interest in the matters, who are then unable to take advantage of rich distributed information.
  • Our view of decentralization is about coordination. It emphasizes solving problems through the federation of “local” units, clustered around the social contexts most relevant to the decision at hand. This is not a new idea: US federalism, with local, state, and national governments, essentially pulls from this principle of subsidiarity, as does the setup of open source code repositories and wiki-like structures for information aggregation. The key is that these local units are composable—modular and interoperable with each other, essentially “stackable” to a more global scale—to enable decentralized systems to efficiently solve problems that may at first blush seem to require centralization for coordination. We call this model composable local control.
  • Subsidiarity is the architecture and type of decentralization that makes composable local control possible. But the dominant trajectory of Web3 is unlikely to deliver, and may even run contrary to, subsidiarity.
  • Theoretically, redundancy aims for security against attack. Yet, as we have seen play out in both recent supply chain challenges and the concentration of most Bitcoin mining into a small number of mining pools, market efficiency tends to concentrate activity in hyperscale centers, often highly brittle to shocks and disruptions (e.g., local Covid lockdown policy) or located in jurisdictions (e.g., China and Russia) that may be vulnerable to geopolitical risks. Effective and secure redundancy requires deliberately compensating for this tendency, choosing diverse “hedges” against risk rather than simply the lowest-cost providers. But achieving such hedging requires tracking locality and network relationships that these purely financial systems ignore.
  • In sharp contrast to these principles, the type of decentralization that we believe is desirable, subsidiarity, focuses on:Keeping data as close as possible to the social context of creation.A plurality of solutions linked and integrated through coordinated mechanisms of federation and interoperability.Leveraging and extending relationships of online and offline trust and institutions.
  • Unlike distributed redundancy, subsidiarity often increases efficiency by leveraging trust, rather than reducing efficiency to eliminate the need for trust. Take something like community mesh networks, through which communities bootstrap decentralized wireless networks through shared nodes and antennae, installed locally. Creative economic incentive design is crucial for the sustainability of such networks, but these incentives are embedded in social relationships, rather than acting as a replacement for them. Similar principles underlie recent, blockchain-based alternatives, which we welcome.
  • Most data are relational (e.g., emails between people, genetic data partially shared by families, social graph data), so private property conceptions fail. If any individual can block transactions, data becomes unusable; if any can authorize transactions, a race to the bottom results as each data holder tries to sell out ahead of others.
  • For example, a credit union could function as a data steward for member data, and exchange only particular insights with a startup building a tool for loan refinancing or with a public sector agency aiming to improve financial policy, keeping the underlying data private while adding value to the ecosystem and rerouting benefits to members. Such a steward could further interoperate with a network of other credit unions for better leverage and benefits. A similar structure could be used for needs as diverse as Covid-19 contact tracing or tracking carbon emissions, unlocking massive public benefits while still protecting individual and community decisionmaking.

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