There is friction with using traditional funding models for open protocol development. It’s not normal institutional behavior to let go of control. Yet, that is exactly what we eventually expect of early protocol development teams and their backers.
The incentives are misaligned. What are the consequences of this misalignment?
Control of the protocol’s roadmap will reside with a few non-devs (i.e., colloquially known as the “devco”). The devco is likely a small compilation of c-suite BD, Product, and engineering managers, as well as the principal capital providers to whom the c-suite must deliver results
Protocol users and developers must trust this small group not to save the protocol’s success for themselves
Protocol users and developers must trust this small group with sensibly navigating the roadmap through difficult times
Protocol users and developers must trust this small group with avoiding the temptation to gradually erode shared ecosystem welfare in pursuit of the devco’s welfare
Corporate success has been found by aggregating power, influencing the rules of the game, and charging increasing rents. This is why many regulations exist—government is a sometimes effective check on power.
Our expectations for the devco to build effective governance frameworks is a cognitive error, as giving up control runs counter to normal institutional behavior
In the early years, open protocols require centralized control and sufficient funding
Funding can come from a variety of places—public good funding, private capital funding, etc
Over time, open protocols are expected to drop their reliance on private funding and become self-sustaining
Over time, open protocols are expected to develop a resilient and manageable political framework for power struggles to happen, and empower the community to swiftly resolve protocol leadership failures when they occur
The strong ethos of can’t be evil > don’t be evil will slowly erode, as exciting new sufficiently open protocols find PMF and demonstrate user onboarding
Roadmaps become increasingly controlled by devco leadership
Devco leadership will favor doing what’s best for their stakeholders—devco stakeholders are not protocol users and developers
Inevitably, we are left with closed protocols that make roadmap decisions for the benefit of devco stakeholders instead of benefitting the developers and users that bootstrapped the protocol
Diversify funding across multiple funding categories, and avoid concentrations within categories
Create an external oversight committee that can act as a credibly neutral check on devco leadership
Work with legislators and regulators to craft minimally viable legislation that empowers a government agency with open protocol oversight
Work closely with developers to understand their preferences for managing protocol roadmap, and build better frameworks from these preferences
Given the incentives, can we reasonably expect a traditionally funded protocol to achieve openness?
Are closed protocols interesting or useful to developers and users?
Are open protocols sacrosanct; untouchable for traditional funds?
Should open protocols be protected from concentrated control from their birth?