ARCC: Governance & Leadership Model in a Decentralized Economic Structure
I’m old school, especially for the crypto industry. ARCC, when we just had a whitepaper draft, was a sponsor at the MIT Bitcoin Expo last year in 2018. We did it to get involved and support the tech development side of crypto. It was a great event, but I remember being at the speakers’ dinner and I was talking to a senior bitcoin core developer and he said he was quite a bit older than everyone here at 34, and I was like, um..I’m 42, so I guess I must have one foot in the grave lol.
This post isn’t going to go into age discrimination here (I think as long as you’re still learning you’re still in the game — so to speak), but there has been this definite shift in trust and the role of individuals in how they govern/lead a system.
The discussion about governance is long overdue and critical for a society structured on top of networks, whether it be communication, information or community. From telecommunications, to the internet, to social networks, our world now interacts through these networks and it affects not only the speed at which we interact, but also how quickly power accumulates. And even if we interact through these networks, that doesn’t make the management and the financials any more transparent, the case in point being the financial markets and the ubiquitous Facebook. Network effects giving power at a rapid pace without transparency is just asking for a disaster on both a trust and abuse level.
But going back to the age thing, when I was growing up, it was all about leadership and character. These were the two things a person needed, and that society needed from us in order to succeed and contribute. If you look through business books throughout this period in the 80’s and 90’s, it’s all about leadership (although the standards for character fell to the wayside). And all of this was focused on ‘getting the job done, results, and crushing the competition.’ But at a certain point, in our networked society of instant monopolies, leadership became a moot point because the network gave so much of a competitive advantage that leadership was more about how to take advantage of maximizing the gains rather than leading to greatness by solving real market/societal problems.
Peter Thiel talks about this in the book ‘Zero to One,’ that this entire networked monopoly is a good thing because then the companies can focus their excess profits/resources on doing societal good or moonshot projects, but outside of a handful of examples, Google and whoever else (Microsoft?, dunno really, although I’d put Elon Musk in a class of his own…FYI I’m a fan of his for sure), it is still up to their own agenda of what constitutes a good contribution off of their own network and platform, which isn’t a bad thing, but it continues to increase their influence and power in a system where there are no brakes or fail safes to it. You can’t keep amassing this much power before it just naturally overwhelms, as an Archon would put it, “Power Overwhelming” (I’m Korean, sue me… ^^).
But even with a council and transparency and checks and balances, a centralized system to the exponent networked is just inherently going to go in that direction. But in a decentralized distributed network, governance becomes a key structural component in maintaining what makes such a network powerful and useful.
So getting with the new school of decentralized distributed networks, the discussion has ranged from zero governance that ‘code is the law’ to community voting, to a mix of smart contracts, community voting and executive execution on those votes. Key to the discussion though is ‘how truly decentralized’ the network is in allowing a few number of decision makers to make the ultimate decision and therefore be in the position to accumulate power. After all, if no one is in charge, then really power has no place to accumulate. But if no one is in charge, then we assume that leadership has no place in the equation when it comes to our networked world.
I won’t get into the debate of bitcoin and its derivative forks (full disclosure, I’m as much of a bitcoin maximalist as you can be while launching a new cryptocurrency, take it for what you will) but at the heart of the debates of block sizes and direction of development is also an issue of governance. When it comes to bitcoin, it’s as good as it gets, in fact its founding story of Satoshi Nakamoto, a founder who like a prophet came down, gave his message, then vanished, is as much as a romantic modern myth you can hope to get. But for everyone else in this space that has a founder and core team, we are left with governance as a major issue that needs clear resolution.
I think this is one of the most important issues of our time, governance in a decentralized distributed system and it’s something that was one of the last things I came to a resolution with for ARCC, simply because it was such a difficult issue.
The major issue that we had with ARCC’s governance set-up was that our project requires leadership. This took me a long time to comes to terms with because I had to be sure that I was not still in a centralized mindset making this conclusion and if there was a way to set up the project in that range of being trustless to being openly accountable. And for our project where we focused on exposing corruption, it would be ironic if our own structure was prone to the same conditions of possible corruption.
But why we need leadership at all for ARCC is because we are attempting to solve a problem which no one has directly addressed at all and at an unprecedented scale, systemic corruption in failing emerging markets. It’s extremely hard to explain how difficult and damaging this problem is to those who have never been to an emerging market and seen whole areas of a city just surviving day to day, when a couple of blocks away there is a 5 star hotel, some of the world’s tallest buildings and a few thousand Starbucks thrown in. But establishing a decentralized network in this environment isn’t the same as establishing one in developed advanced economies, there are just so many barriers and issues that only a sustained focus can make it happen.
So in the context of leadership, our resolution for governance at ARCC is a combination of three different mechanisms of: (1) making the executive leadership’s and the project’s operational funding/incentive entirely performance based, (2) full transparency on the chain for transactions done, and (3) a monetary council whose votes are binding on the token economy of ARCC.
Decentralization is the ability to have structurally equal access to participate and grow along those lines of participation, but to allow for leadership to do what it needs to do without fear of taking on its own agenda, no matter how well intended it may be.