The Spectrum of Decentralization

In this week’s Collab.Land Podcast, Abridged and Collab.Land co-founders James Duncan and James Duncan break down:

• Incremental Decentralization
• Incremental Decentralization vs. Progressive Decentralization
• Concentric Circles within Decentralized Organizations

These tenants are going to shape the ways we interact going into the future.

Duncan: Welcome back to the second podcast within the Collab.Land podcast series. I’m James Duncan.

Young: And I’m James Young

Duncan: And we are going to be the hosts of this podcast. We are the founders of both Abridged and Collab.Land, and this podcast is built to lay down some of the foundational principles of the way that we think about building in Web3 and creating a new future for human organizational development.

In this podcast we wanted to cover a few different topics.

One thing is a term that we coined. I think Eric Chong actually probably coined it: Incremental Decentralization. And then we wanted to get into the difference between that and Progressive Decentralization. We also discussed this idea of Concentric Circles within decentralized organizations.

I think those are the three topics we’d like to cover. We’ll try and keep this to 20 minutes so that you guys can enjoy it relatively quickly. James, do you want to take a stab and get us started with the idea of:

Incremental Decentralization and where that came from?

Young: Yeah, when it comes to Ethereum Web3 in general, you have this idea of key management. And while it’s super empowering and it’s the core to self sovereignty, it is the largest hurdle for the average person that’s used to going in one click shopping on Amazon to be able to get their mind and head around. And so the idea of incremental decentralization is to pair the user’s incentive, which means the amount of money they’re holding in crypto with the amount of self sovereignty.

You have a low stake, low amount. It’s okay if you have a custodial or somewhat custodial solution as you’re getting more into crypto and you’re accruing more value or holding more value in crypto. You as that user get to not only define how much is too much because a dollar might be a lot to someone, but it might be nothing to another person. So from a user perspective, you get to decide, how much is high stakes? And you also get to decide when you get to learn more about key management.

So for us, in Ethereum in general we move from this key base wallet to a contract based wallet where you can start off with a recovery mechanism.

So at beginner mode, you might have the notion of a guardian that can recover your funds if you attest to your identity, an e-mail or some social network. And then as you gain more value and as an intermediate user, he may opt for a social recovery. So you don’t want to trust this guardian, which is super easy to set it up, but it’s somewhat centralized and it looks somewhat custodial to something a bit more known to you. It might be your friends or family that can help you with key recovery. Then once the stakes are high enough, you’re going to take the time and effort to learn about key management. And that’s when you become fully self sovereign.

You can start in a centralized fashion because it’s not that centralization is the problem, and there is an exit for you. Then you can progressively, incrementally exit out of a centralized solution, and turn to your social graph for key recovery. You may just want to stay there. You might always want to have social recovery turned on. The people that you use for social recovery may come in and out. And you might not never go to fully self sovereign. That might totally feel okay for you, you know, because you’ll never have to fully rely on crypto.

But some people may want to become fully self sovereign. So incremental decentralization is a spectrum that allows people to enter at these different levels of self sovereignty and customize their experience based off of what is considered high stakes to them, at a time that they’re comfortable with.

Duncan: Right. And to illustrate that a little bit more, I think one of the metrics that we’ve used the most when thinking about incremental decentralization versus the alternative, which has traditionally been MetaMask. One of the metrics that illustrates the issues with MetaMask and private key management today comes from a study of CryptoKitties. Dapper Labs that showed that 99 percent of people who are prompted to download MetaMask decided not to.

That’s core to the reason why you originally built Abridged.

This concept of creating a wallet, and a smart contract wallet system allows for easy on-boarding from the beginning, with limited funds at risk. Then you incrementally create a path for the user to learn about self sovereignty, how to completely decentralize, and manage assets. Users can eventually decide to remove all private keys that are not theirs in order to prevent any sort of fund loss risk to happen.

I think that makes a lot of sense.

And I really think incremental decentralization is something that we definitely bring into many of the concepts that we are working with, including DAO Ops, which is the idea that we’ve been fostering since the beginning of 2020, building Web3 functionality into social and Web2 interfaces that already have users like Telegram and Discord. I think SNS would be a target relatively soon.

But another piece that I think is interesting, and I believe Jesse Walden had a blog post about this, is progressive decentralization and this I think it involves incremental decentralization.

In some ways, it’s gone a meta level where:

progressive decentralization to me seems to be more about the decentralization of tokenized networks, and where

incremental decentralization in the case that we’ve used, is about the decentralization of key ownership and so we’re looking at the individual.

Young: So it’s like the difference between psychology and sociology, where incremental decentralization, like you said, is about the individual and progressive decentralization, is more about the network of token holders.

Duncan: Yeah, that’s exactly right. Decentralization is incremental.

Psychology is about the individual and Sociology is about the entire system.

Progressive decentralization to me has been a conversation about the distribution of ownership of large platforms, similar to Compound, MakerDAO, and any token network.

How do you launch a token?

The thesis behind it is that you need to launch something that’s relatively centralized in order to make any progress in the beginning.

Then eventually find a way to distribute that network ownership to effectively decentralize. And that’s how it progressively becomes more decentralized.

We are seeing that now with governance tokens launching. That’s the path for progressive decentralization.

Young: Got it. That makes sense. It always starts with this. Doing things the way that you know how to do it, whether it’s on an individual level and like having just password recovery, because key management is such a new concept to a network where you have one team or one group of people, or a company that bootstraps that system, or that network, or that community, and then it relinquishes control over time to its token.

Duncan: Exactly. Super interesting.

So then I thinking of something else, a concept that we’ve kind of come up with recently when thinking about DAO Ops and onboarding not only into crypto but into DAO and these decentralized organizations, as well our experience building within MetaCartel and creating that ecosystem and community, and assisting where we can.

The concept of Concentric Circles stems from our perspective or the context of the Tyranny of Structurelessness.

The two ends of the spectrum of an organization would be:

• A very well defined hierarchy, completely decentralized, vs.
• Structureless organization, or a flat organization.

That something that we’ve experienced time and time again through the different communities that we work with.

The organizations that claim to be completely flat are ultimately dominated by a very small minority that is essentially a shadow governance. That’s the idea of the Tyranny of Structurelessness, that if you claim that everything is flat and there isn’t a defined hierarchy, then the actual decision making is unclear and is subject to anyone who wants to take power and make the decisions.

And there’s a lot of information asymmetry that stems from that kind of culture or organizational design that is extremely ineffective. And I think we’ve seen that in a number of different places.

On the other end of the spectrum, we also don’t want to create another corporate culture where you have this hierarchy and this relatively arbitrary value system that is determined by how much revenue the entity is making and then who is on top and who is on bottom and how many people need to get fed more or less.

We’ve been thinking about this idea of the Concentric Circles model that allows for a more fluid movement between hierarchies. The Concentric Circles idea is more in the middle between those two extremes.

Young: Yeah. If you think about it, there may be many rings to this concentric circle, but on the outermost ring, you’re on the edge of being outside of the circle altogether.

In online communities, you see this a lot, where you have a majority of lurkers. And then as you go toward the center of the circle, it might be a gradient, where the circles may not be clearly defined, but you get more involvement, and more interaction at the core of the circle, where the core contributors are.

You see that not only in online communities, but you see there’s also an open source development. And the idea here is to be able to help manage that and help define those different rings.

What we’re talking about in terms of DAO Ops is:

• How to move people from the edge to the core
• How to move those contributions from the core back to the edge
• How to measure those things.

What does that mean?

A lot of times it’s hard to explain these things because each community will have a different set of values and a different culture. So what might work for one community is to move people from the edge toward the core, and that is going to be different for another community. It’s hard to compare.

DAO Ops is being able to understand the health of your community.

It’s going to boil down to governance with crypto, and the ability to vote within a DAO. Money acts as a scarce digital asset, but so does voting.

How do you make sure that the members of the community are aligned?

You want to create this momentum from the edge to the core always, and allow the core to move in the same direction, so it’s more of a circle.

The mental model from a visual perspective, seems a bit more flat.

What we’ve seen in the MetaCartel, for example, is the ability to dynamically or fluidly move from like the edge to the core. For example, there are core MetaCartel team members that were on the outside edges but earned their way in. And I’ve seen members that have been core that worked their way out.

A lot of that coordination is a perspective from individuals, and it’s not systemic. And it takes a lot of one-on-one async and real-time communication.

What we’re trying to do is figure out a way to systematize that coordination so it looks more like a game so everyone who knows the rules, and knows what it means to be in those different rings within the circle, to reduce miscommunication within the community, and that reduction of miscommunication of the stated rules and values of a community allows for that trust to emerge.

In the end, whether it’s an online community, or whether it’s crypto, or a DAO, and you’re voting, people are coming together and collectively doing some act, like pulling resources, or funds, or ideas, and moving forward in a direction — all of that requires a level of trust, because if there’s no trust nothing gets done.

One of the big learnings from MetaCartel is understanding the difference between like transactional relationships and trust based relationships.

In the end, whether it’s an online community, or a DAO, you’re dealing with people and you’re cultivating relationships. Those relationships need to be based on trust in order to get things done.

Duncan: Absolutely. I think the concentric circles idea definitely stems from different initiation processes. I would also say that actually, while it needs to be defined, that there are certain levels to participate in. I think to some extent you can have secret pathways to getting to the next level in a way that is not necessarily extremely explicit.

For instance, within the MetaCartel, the way that you see this happening is that people just decide to start participating. And it’s not like there’s a rulebook that says, “Hey, in order to become influential in the MetaCartel Town Hall, you need to do X, Y and Z.” They just do the thing and and participate and involve themselves and then become members of the community because they are contributing value. Everyone else recognizes that and there’s a lot of social aspects allowing for that kind of hierarchy to emerge in a way that is both clear to the participants and members, but also nuanced so that it’s relatively open. And that’s the permeable membrane that allows for this organic kind of system to form.

Young: Yeah, in this kind of emergent design there’s a level of play or of just experimentation that occurs and the trust in the group is, if you do something and people think it’s valuable, you will be recognized or rewarded for it, so people are wanting to do things. They also know that they’re putting themselves out on a limb. And that’s where the trust comes in.

If they do something that isn’t going to be productive or that the group doesn’t like and doesn’t value, they won’t be shunned or put down for it. That’s where the playfulness comes in, where it’s okay to kind of mess up where you’re not looked down on if you make a mistake or you fail.

It’s that kind of ethos that allows this emergent designed to figure out what is valuable in the group and what is productive.

I think it’s that playfulness, that kind of ethos of experimentation that allows people to put themselves out there. And that means that those people are taking the first step, that they’re putting themselves out there at first hoping to be caught, but not totally fall over. But if you do fall over, no big deal. Get back up and try again.

Duncan: That’s right. That’s right. Awesome. So coming up at the 20 minute mark.

To just to review really quickly so people can take away the concepts that we just discussed. I think that the main points that we had were:

1. Incremental decentralization is a path for new users and describes a system for new users in crypto to progressively take self custody of their keys while also creating a soft landing pad for them as they initialize their integration, or adopt cryptocurrency and create an account. It might be custodial at the beginning, but then as long as there’s a path to self custody, there’s a base understanding that at the very least, there’s a path to decentralized ownership.
2. The second principle that we discussed was Progressive decentralization, which is the idea that these companies and products that are being developed within the DeFi space, DAOs, and Web3 today first began as a centralized entity and progressively decentralized through token ownership and distribution. It is still emerging and will be really interesting to see how that continues to develop.
3. The third concept is this idea of Concentric Circles where we have something between a strong corporate hierarchy and a permissionless decentralized entity. In a completely flat entity, you have these levels of influence that are granted to you by a specific community in a way that is understandable by its community members, but nuanced enough to allow for an organic hierarchy to form.

I think those were the main points.

Young: Now, that was a great summation. This has been good!

To echo what you’re saying, these are kind of the principles of values or hypotheses that, we lean on as we make product decisions and move forward gives us a lens to look at as we innovate.

Duncan: Absolutely, awesome. Well, thanks, everyone, for tuning in. And we will be online soon with another episode of the Collab.Land Podcast!

Please reach out! We are always down to chat :)

duncan@abridged.io