What is Leadership in the Decentralization of DeFi?
Decentralization and DeFi are taking over the world of finance. The technologies and approaches used are innovative and effective.
We’ve all heard a lot of good news about it this year. It comes with a lot of opportunities for investors and programmers all around the world.
However, when it comes to Leadership, it becomes somewhat fuzzy. Who is the leader of a decentralized network?
Leadership is, in its essence, a concept that requires the centralization of power. It is defined as such: “the action of leading a group of people or an organization”.
There are entire books about this concept, good practices, and theories the world has accumulated over the past 100 years and not only.
When there is Centralization in Decentralization
For a good part of the DeFi projects, there is a level of centralization. The core team decides what happens to the future of the project, partnerships, etc. Even though the code itself is open-source, the central team still handles proposals for initiatives that are pushed by developers in the community.
The same team handles social media, partnerships, marketing, and most of the operations and processes of the project, which is more akin to a centralized company than a decentralized network.
In this case, we can say the leader is the CEO or Founder of the company. So there is leadership in Defi.
But this is only half of the situation.
Even though there are companies and centralized projects, there are also community-driven projects.
Most projects are called DAOs (Decentralized Autonomous Organizations) for a reason.
A DAO is an organization created by developers to automate decisions and facilitate cryptocurrency transactions. — Investopedia
This definition is a summary, and it represents the basics. However, there are projects that are taking this further, via governance and other managerial approaches.
For example, Golff Protocol is such a project. It has a centralized team of developers as well as administration, but marketing, community management, partnership, and other activities and operations are taken care of by the community thanks to governance and engagement created.
This is somewhat a hybrid system, as nobody figured out yet how you can make a truly community-driven and autonomous project or managerial structure, but a lot of projects are on the right track.
When the group is the Leader
This article is not nearly enough to explore all the aspects of leadership in decentralization, therefore a follow-up might be my next article. Anyhow, the main question to explore now is how can leadership exist in a completely decentralized system?
Nature gives us a myriad of examples for this kind of mechanics, most popular being bees and ants. They have large populations of “workers” that procure and prepare food, build the nest, etc. They do have queens, but their purpose is not one of leadership, but of survival — they need to breed new generations.
We could learn from them, as science already does.
I believe the answer has 2 parts: a sound governance system, and an engaged community.
Especially when it comes to DAOs, governance systems are a great method of managing chaos. When you have a large community, a certain percentage of people will voluntarily work towards a better project. Whether that percentage is represented by 10 or 1,000 people, it doesn’t matter as of now.
Governance is mainly linked to voting systems as a filter of implementation.
I will briefly describe how I believe a large project can be 100% autonomous. So, there are a few aspects that need to be taken care of: development, marketing, partnerships, community management, social media, customer service.
For each of these aspects, there should be a system from ideation to publication.
Whether it’s some code meant to improve the platform, a new stylized logo, social media content, blog articles, updates, or other types of activities and content that would add value to the project and community, a proposal must be pushed first to the governance platform.
Depending on the nature of your proposal, the time to vote should be flexible. Maybe 2 hours for social media posts, but 7 days for code, 1 day for articles, etc.
After your proposal is validated, the content should be pushed/published on the respective platform (GitHub, Twitter, Reddit, Medium, etc.).
When it comes to partnerships, customer service, and community management, there are a few quirks.
These three areas of work should either be fully controlled by chatbots, or hybridization between manpower and technical tools.
When it comes to chatbots, the answer is easy. Someone codes them so good, we’ll never have a problem. Unfortunately, this is not how technology works. Not in our days at least.
Since a DAO would be a project by the people, for the people, with the people, I believe the answer is a hybrid system between humans and code.
For example, when a partnership is proposed and voted “for” by the community, most engaged developers would be notified to implement the changes (and given the opportunity to contact the partners to discuss further). Either this, or the partners propose the code itself, and if the vote is passed, it will be automatically pushed to GitHub.
Governance can help with customer service and community management as well. A few times a year, the community should vote for a team of community managers and customer service representatives. This could also work for business development/partnerships.
Why would someone actually make proposals and work?
The answer is easy: they like and believe in the project. The profit motive is not the only thing that drives innovation and value generation. That’s why there are hundreds of thousands of open-source developers, Minecraft communities, Wikipedia, volunteer firefighters, and more.
There is another angle to this, and that is their stake. Usually, people invest in DeFi projects, and they could further help in its development and growth, just due to the fact that if the project becomes better, the token/coin will be more expensive, and therefore, their portfolio grows.
I also believe that, for a truly autonomous system to work, you need incentives. This is usually what brings people in for the first part: fundamentals, community, and maybe the most important, the yields and potential.
So, for each time someone publishes an article, piece of code, or social media post, they will receive back tokens. However, for this to work, tokenomics need to be adjusted, and limits included (For example, max 3 posts per day per social media platform) so that the system isn’t exploited.
Closing Thoughts
Leadership is in its nature a centralized concept. However, this concept could still work for a decentralized project. Except, there is no leader, but the leadership is distributed amongst the community through values.
I believe this is true leadership. Leadership is about inspiring others and nurturing their values and skills as a group. That’s why people still have as role models historical personalities that are no longer among us.
