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Governance with a token

So bringing some recent threads together – this video includes a discussion about crypto currencies and governance:

  • Taking a lead from game theory – let’s say that the rules of the game define how economic value is shared across participants, and that governance defines the way these rules can be changed.
  • In the capitalist economy – money facilitates the transfer of value, the profit motive determines how value is distributed, while the power to change the rules resides with capital (ie. shareholders).
  • In the crypto-space – we can have tokens that combine value transfer with governance such that the more people that use a system, the wider the distribution of tokens and the more people that have a say in governance.

Suggests a value-in-use approach to governance where you can “distribute power more evenly across the network because everyone is sharing the same asset” – as currency and capital are combined. Power is distributed based on how everyone is contributing to the network.

Under this model, the aim is to reward participation with the power to govern. Governance becomes a mechanism to protect against being “forked to death” as the value to govern accretes to those that work within the structure. A well designed governance mechanism will therefore better enable a network to evolve over time.

Also, suggests that models that reward participation are likely to be more robust than ICO’s where external capital gets to buy power up-front – which just internalises the governance problems that exist with proportional shareholder models elsewhere.

Got me wondering how a currency & capital token simplifies the management of a mutual…