Decentralization is a means to an end. The end goal is good decision making that cannot be corrupted. Following this strictly to its conclusions, theoretically one could say that decentralization is not essential.
But I strongly believe that decentralized governance for the Maker protocol is essential, because it leads to the best decision making:
Resilience: quite simply, a single (or very few) decision makers form a bottlenecked point of failure that we simply cannot afford. This doesn’t need much explanation. A single person or small group’s decision making may fail by loss of interest, distraction, hubris, lack of knowledge to deal with a new situation, burnout, other mental health issues, legal pressure, coercion, death by colliding objects, etc. The list is endless.
Incentive alignment: if we want to scale, Maker will need many people working on it. And if many people are working on the protocol, we better make sure that their incentives are aligned. A plutocratic model with voting power proportional to token ownership works well in this regard.
While I’m a strong believer in democracy for wider society (because participation isn’t voluntary and a person is more than how rich they are), democracy wouldn’t work for a blockchain protocol like Maker because there’s a lack of incentive alignment.
That said, I love how much soft power has become a part of Maker governance. While MKR voting power has the last say, a well articulated opinion carries a lot of weight. This is good because it biases towards sound logic. MKR holders’ bags should be the counter-weight that keeps populism at bay.
Sense of ownership: this is an argument about the motivation of the people working on Maker. The energy and dedication from the DAO comes from a shared sense of ownership and this is the reason why everyone working for Maker should be compensated with at least a little bit of MKR.
Bandwidth: once resilience, incentive alignment and sense of ownership are in place, it is time to unlock the superpower of the DAO: hacking the delegation problem.
One of the main challenges of centralized organizations is the inability to effectively delegate. Because every decision in the end needs to be traced back to the stamp of approval of a small group of people with limited time, the entire operation is constrained by that group’s processing bandwidth. By removing centralized bottlenecks and decentralizing decision making, we turn single-threaded computing into massive parallelism.
A decentralized organization can grow exponentially, but it requires that we build factories not cars: the blueprint that can be repeated and repeated by everyone who lay their hands on it. Like a self-replicating machine, groups of people can organize independently and become unstoppable. This is why we need to focus on education, training, and open-sourcing all the things; not just programming code but also our legal frameworks and process documentation.
Diversity: as Maker is a global and open organization that requires a sense of ownership to operate, everyone needs to feel welcome so that they can participate. A centralized leadership cannot be very diverse. Decentralization helps with this. Needless to say we can still do a lot better in this regard.
Consistency: centralization can work and decentralization can work. What cannot work is a Frankenstein creation of centralized and decentralized elements. Blockchain technology, the platform we build on, is fundamentally decentralized. It’s a well established principle in software engineering that organizations should mirror their infrastructure.
If we want to run a centralized operation, why on earth would we want to use a blockchain!? They are really slow and expensive databases, you know. The reasons are decentralization, resilience and trustlessness.
Blockchain, the Maker protocol, are decentralized by nature. This is how the entire thing was constructed. Centralizing governance now makes as much sense as switching an electric car to gasoline while driving. Let’s reconfirm this and focus on how we can make decentralization work.