Original title: Factors of decentralization of web3 protocols: Tools for planning greater decentralization
By Miles Jennings, Stephen Wink & Adam Zuckerman
Original compilation: Sissi
Decentralization is a key innovation brought about by blockchain technology and one of the most important features of the web3 protocol. Therefore, for moreAccurately assess and compare the degree of decentralization of various web3 protocols,web3 actors, policymakers, and regulators must work together to develop a more unified and nuanced understanding of decentralization. Doing so will not only better enableThe regulation and policy of web3 adapt to the characteristics of decentralization, understand and consider how decentralization can reduce risks, and finally motivate the builders of web3 to pursue decentralization in order to maximize the public interests promised by web3.
To this end, we define three types of decentralization and propose relevant elements for each type,Suitable for Tokenized Blockchain Protocols(e.g. layer 1 and layer 2 blockchains such as Bitcoin, Ethereum, Polygon, Solana, Optimism, Arbitrum, zksync, etc.) andTokenized Smart Contract Protocol(eg Uniswap, Aave, Compound, Curve, etc.). We also providetwo forms, one for a tokenized blockchain protocol and another for a tokenized smart contract protocol, these tables will help enumerate the components of decentralization to provide more concrete and standardized definitions.
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Why is decentralization needed?
Web3 ushers in a new era of the Internet - the era of "read, write, own". The technologies underpinning web3 enable "trustless computing," eliminating the need to rely on centralized entities to browse the internet and databases. This allows us toDevelop more complex and advanced protocols that provide the functionality of the modern Internet while being truly owned by users.For example, a decentralized social media protocol can support the construction of multiple applications, and distribute ownership and control of the protocol to a large number of developers and users through token ownership.
Decentralization is a key feature of the web3 protocol,It drives this paradigm shift. Decentralization willfirst,
first,Decentralization makes the web3 system reliableNeutralityComposabilityComposability(Just like Lego bricks, software components can be mixed and matched). therefore,The web3 system is more like public infrastructure,Rather than a proprietary technology platform. Unlike the closed software of web2, the web3 protocol provides a distributed Internet infrastructure on which anyone can build and create Internet businesses. Importantly, in web3 this can be done without requiring permission from the original protocol deployer or using a centralized control interface. For example, Twitter can be contrasted with a web3 protocol that provides the underlying data architecture of social media controlled by the public through token ownership. In such a system, anyone can build their own client or application on top of the protocol and gain access to their network of users.
Secondly,
Secondly,Decentralization requires broad distribution of control and participation in web 3 protocols,ensuring that the development and use of the network reflects the views of various stakeholders,And not just the companies that create these protocols. With properly structured protocols that promote decentralization, the concentration of power in the hands of one or a few companies can be limited. Decentralization should therefore limit the control that businesses or individuals have over thresholds and ensure that any changes to the protocol are consistent with the broad ecosystem of users who hold tokens and ultimately govern the network.
third,Decentralization allows for the design of more stakeholder-capitalist systems—systems designed to serve the interests of all participants more equitably, rather than serving only a select few. Token-incentivized stakeholder capitalism distributes ownership and control among a wider range of stakeholders, rather than placing equity holders above all other stakeholders, including customers and employees. therefore,first level title
Decentralized type
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#Technology decentralization (T)
Technical decentralization mainly involves the security and structural mechanisms of the web3 system.Programmable blockchains and autonomous smart contract protocols can support technology decentralization by providing an autonomous, permissionless, trustless and verifiable ecosystem for the transfer of value. Products and services can be deployed and run without relying on trusted, centralized intermediaries, opening up vast possibilities.
#Economic Decentralization (E)
Blockchain and smart contract protocols, with their own native tokens, unlock the potential for these open source and decentralized systems to have their own decentralized economies (i.e. autonomous free market economies), enabling more people to participate and benefit from these Benefit from a decentralized ecosystem.
Through careful design decisions, builders of web3 systems can facilitate the formation of a decentralized economy, exchanging and accumulating value (including information value, economic value, voting rights, etc.) from various sources. If constructed correctly, decentralized ecosystems can use tokens to incentivize participants to contribute value to the ecosystem and distribute value more fairly to the system's stakeholders based on their contributions. For this to happen, web3 systems need to give power, control, and ownership to system stakeholders (via airdrops, token distribution, decentralized governance, etc.). therefore,The value of the entire ecosystem will be attributed to a wider range of participants, rather than being concentrated in the hands of a central entity and its shareholders.
A constant incentive balance among stakeholders (developers, contributors, and consumers) can drive more value contribution into the overall system for the benefit of all.In other words, this ismodern network effectssecondary title
#Legal Decentralization (L)
Legal decentralization depends on whether the decentralization of a system removes the risks that particular regulation is intended to address.
For example, technically decentralized blockchain and smart contract protocols can eliminate the risks associated with trusted intermediaries. Thus, the technical decentralization of such systems also means that they are legally decentralized when it comes to regulations against trusted intermediaries.
Other risks can also be removed for technical and economic decentralization, including those associated with the web3 system's token and its underlying value. This decentralization would eliminate the need to apply U.S. securities laws to token transactions, which could severely limit the widespread distribution of tokens.
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elements of decentralization
In a web3 system using native tokens, the three types of decentralization, technical, economic, and legal, must be fully considered. These types interact with each other, and changing one may affect the other two.For example, a decentralized economy can drive the system toward legal decentralization by prioritizing decentralized ownership of stakeholders, accumulation of value from decentralized sources, and distribution of value to decentralized Stakeholders. All of these factors reduce the risk of information asymmetry and reduce reliance on individual management efforts.
Conversely, if the digital asset value of a web3 system depends on the continuous management efforts of the original development team, then the system's decentralization at three levels: technical, economic, and legal may be threatened. For example, the departure of a management team could put significant downward pressure on the price of a digital asset, making the system more vulnerable to51% attackImpact.
Given this interplay, we break down decentralization into a number of factors that can affect it. A comprehensive list of the most important elements of the Tokenized Consensus Blockchain Protocol and the Tokenized Smart Contract Protocol is provided in the diagram. These elements are broken down by type (technical, economic, and legal) and category (computation, development, governance, value accumulation, and usage and accessibility).
Decentralization is an evaluation process, not based on absolute criteria, but on a range of circumstances including the full extent of any web3 system. The relative importance of the factors will vary depending on the purpose of the web3 system and the evaluator. Additionally, the trade-offs between different types of decentralization may vary by project and person.
The two tables mentioned in this article should be useful tools to provide a more concrete and standardized definition of decentralization. Hopefully this will enable web3 players to contribute to building more decentralized projects, while enabling policymakers and regulators to design regulatory frameworks that recognize the power of decentralization to reduce and eliminate risks.
