On Trust, Confidence, & Progressive Decentralization

Progressive decentralization. Exiting to community. These are phrases often used in the web3 space to describe the process by which a project transitions from being managed by a centralized team with special permissions to the collective that it ultimately serves. They are most commonly uttered in conjunction with DAOs, short for "Decentralized Autonomous Organization," a supposedly new kind of coordination model enabled by the invention of the blockchain. More often than not I think we can drop the A when talking about DAOs, or at least put an asterisk by it. First and foremost they are a collection of people making decisions about how to organize themselves in an egalitarian manner with little to no single points of control or failure. Eventually those decisions can be encoded into a set of rules that a machine can execute consistently and without oversight, but the first step will always remain. Regardless, there are many interesting questions associated with decentralized organizations, this essay will deal with how one even takes shape in the first place.

The nature of new projects is such that they tend to start small. Typically an idea takes root in a group of a few committed individuals and is then slowly advanced and adopted. I can't really think of an example in human history that began with immediate widespread adoption and didn't involve some sort of coercion. To the extent that effective decision making power in these groups initially rests primarily with the people who originated them, almost all groups can be considered de facto centralized to start, hence the need for progressive decentralization. In some cases the network itself takes care of this. With Bitcoin for example, progressive decentralization was achieved thanks to the code's incentive structure which rewards participants with currency in exchange for validating transactions. This created a virtuous cycle wherein people joined the network to compete for the reward, thus increasing the network's decentralization and trustworthiness, which in turn increased the value of the reward and attracted more people. However, for all of its computational complexity, the function of the Bitcoin system is pretty simple, it's a distributed ledger that keeps track of who has what Bitcoin when, this makes it somewhat easier to decentralize than other systems with more complex goals. How do you progressively decentralize something that requires intense human oversight and large amounts of decision making across many disparate aspects of operation?

The German philosopher Niklas Luhmann presents us with the twin concepts of trust and confidence. Trust is something that arises between individuals, it is something someone feels towards another person and is at some level irrational, regardless of how much history can be referenced to claim otherwise. I trust my father because he has taken care of me all of his life, but there is always a small leap of faith I take when I choose to trust him again because ultimately there is nothing incentivizing him to continue behaving towards me as he has. Confidence, in contrast, is related to systems, it is an expression of how predictable our behavior is given the rules which govern it. Confidence is in direct relation to the efficiency of the system and the amount of contingencies it accounts for. Confidence is less a leap of faith because one can analyze systems and understand how they work, their results can be inferred with a reasonably high degree of certainty based on their rules.

The concepts of trust and confidence are core to progressive decentralization. A successful centralized endeavor will eventually find itself in a state where a small number of people are spearheading its development on behalf of a large number of people who have some sort of stake in it, not unlike a very packed car with one person in the driver's seat. Progressive decentralization is about shifting things such that the direction of development is increasingly determined by stakeholders, it is about allowing more hands on the wheel. As such, the person driving the car needs to develop confidence in the system by which the passengers will collectively steer, how they'll make decisions about when and where to turn. This does not mean that they need to be confident that the passengers will drive in the same manner and follow the same path, rather just that they won't crash or get lost or do something terrible that would endanger everyone in the vehicle. On the flip side, the passengers, the people with stake but no initial decision making power, need to trust that the person driving will eventually hand the wheel off.

When thinking about progressive decentralization we should target policies which simultaneously build these capacities in each of these groups. A successful policy builds confidence and trust in tandem, it gives the founding group greater understanding of their community and what it cares about, and it gives the passengers a greater understanding of the system and how they can operate within it.

Overheard, Overseen at Hope

"Absolute Power. Absolute Loyalty"
 - tattoos on Allen's forearms which I read for the first time while he sat across from me during family meal.

"Don't sell your soul for the pussy"
 - the Russian man who wears the derby hat with the ear flaps and cut-off gloves

"And she had this beautiful, big hairy--" *makes a curved gesture with his right hand while cupping his left underneath*
 - a continuation of the conversation from which the previous quote was taken, this was said by a small man with glasses dressed in grey