Decentralization is a more nuanced concept than the popular meme would have us believe. It is not as simple as decentralization = good.
There has been a lot of debate about decentralization on the Temporary Transition to Foundation Model thread. Mostly the arguments against are a version of “decentralized is better, giving power to the council is centralized and bad.” I totally sympathize with the concern, it’s a good one, but also believe it to be based on misunderstanding of how decentralized systems actually work, and that this could slow down our critical priority of establishing an operations team.
To start, I want to point out that yearn is more centralized than it appears.
“Heretic!! Isn’t YFI the most decentralized DeFi project ever? Doesn’t that mean we’re decentralized?”
Yes and no. Yes, it was an amazing, historic distribution and the ownership of YFI is more decentralized than other governance tokens – but that is just one piece of a much more complex entity. YFI ownership is well decentralized, but the yearn organization is not — and that’s ok. It’s a process. And nothing is completely decentralized or centralized, it’s a gradient.
Voting
Voting power is less decentralized than YFI ownership. For example, a group of the largest holders vote together as @yfi_whale (thread)
There is nothing wrong with doing this. They are acting in their self-interest with the sovereignty available in this medium. Their group is a type of informal and behind-the-scenes centralization. This kind of informal centralization is happening all over the yearn ecosystem.
Decision Making
The actual machinery of our collective intelligence decision making functionality is mostly obscured and generally centralized.
yfi_whale is making decisions on how to vote in private messaging groups. Andre and a small group of core contributors are making decisions on how to spend their efforts in private messaging groups. Special interest groups formed by whoever is motivated to work on specific areas are working in public on discord, making decisions, and plain taking initiative.
The bigger decisions (like to approve a new website design, or vote weighting) will happen on-chain but far more decisions are happening all the time in various small groups that have massive impact on yearn. There wasn’t a vote about making yinsure.finance, I assume Andre decided to do it on his own (as he should). There wasn’t a vote about which frontend design concepts to move forward on and who’s in charge, there was just discussion in discord and lots of hard work and self-managed initiative.
This kind of decision making is glorious and essential. If we tried to make every decision in the most decentralized way we could, via on-chain YIPs, it would be impossible, and it actually wouldn’t be as decentralized as you’d hope.
On-chain voting is our only formalized and transparent decision making system — and that’s actually a centralization of our decision-making ability. It’s a major weak point.
Functional Decentralization
The informal and hidden centralization happening now is part of a natural process. It is up to this forum as the only formal decision-making body within yearn to help empower these small groups to make decisions for yearn in a transparent way so that they can be effective, accountable, and accessible for community members to contribute to. This is not ceding power to leadership groups, I do not advocate for that. I advocate for empowering special interest groups to take action according to their best judgement on our behalf and with our support and oversight.
We need a diversity of decision-making capabilities and groups to thrive. Some may take the form of DAOs, others will be more informal, and others springing ad hoc from the natural hierarchies and teams that emerge in the communications channels.
We will not survive as a “fully decentralized” organism with just on-chain voting. That isn’t even possible. If we don’t trust our community and grant them formal decision making powers (like the multisig council) more and more small centralized groups will form in the shadow to pre-process our decisions for us and we’ll have decentralization theater, not decentralization.
Prioritizing our Next Steps
I believe our critical priority right now is to approve an operations team to make budgets and spend money.
While we could present budgets here in the forum and debate them and vote on-chain that’s slow and timid. Do we have such little faith in the quality of our people that we can’t assign any substantial responsibility outside this DAO?
The risks of not being able to spend money and move forward efficiently is an order of magnitude bigger than the risk of mismanaging our funds. We have to evolve, grow, learn, and try things.
So here’s what we have to do:
- Update the membership of the multisig (thread)
- Give the multisig limited powers to make and spend budget as an operations special interest group not as a leadership team or foundation (thread)
Everything else is secondary to this. Without functional ops we can’t hire devs or pay people for the work they are already doing, and we can’t move at the speed this industry demands.
Note
I don’t want to open a can of worms, but I do want to point out that there are other options than having the multisig function as the ops team. They already have the critical job of managing the YFI governance contract.
- We could give that power to the yDAO (bias: I am a member) which is already established to hold and spend money.
- Or we could create a new ops team and give them the power.
All that being said, I think that if we can update the membership of the multisig in a reasonable timeframe so it’s composed of committed and active members (it’s a full-time job) that’s the easiest solution.