Challenging traditional institutions: the role of decentralization in governance

5 min

Decentralization is a big idea that aims to alter the balance of power by transitioning away from traditional institutions and empowering individuals. It is a core deliverable and key mission for many blockchain projects. The technology exhibits decentralization as it is spread across multiple nodes run by multiple entities offering network empowerment within a system that grows organically with its user base. What about the user base? How are decisions made about the evolution of the blockchain?

The concept of ‘institutions’ – commonly viewed as centralizing, bureaucratic, unyielding, non-representative, open to abuses of power, even just plain old-fashioned – may at first appear anathema to the world-changing mission of Cardano. In the context of modern, decentralized governance, getting rid of institutions might sound appealing. However, when an institution is made of and led by the community it serves, it starts to look different. It changes from the top-down, hierarchical approaches of the past, to a more democratic system where power lies with users, every voice counts, and decision-making processes empower consensus in a clear, fair, and collaborative manner.

What happens to a community without institutions? Without organization there is chaos. In the history of man there has never been anything meaningfully built from chaos. Ironically, only order. To build equitable institutions, communities need accountability, structure, and transparency. With those in place, domain experts and stakeholders can leverage their collective knowledge to establish standards and develop frameworks that benefit the greater good. Only then will communities feel confident that the input they provide is sound. With blockchain technology, we now have transparency and accountability, so institutions can’t hide when they do something wrong.

Institutions provide constancy through needed structure while remaining fluid and open to change. And even abandonment if no longer needed; the membership book of the Chariot Association has long since closed, even though such a body may have been very useful to the Hittites of 20th BC Mesopotamia.

In the Cardano ecosystem, institutions are entities or collectives that aggregate multiple community members and expertise to support a specific need or aspect of Cardano. There are already many ‘institutions’ thriving within the ecosystem: the Cardano DeFi Alliance ("CDA") is a consortium of projects with the primary mission of standardizing Plutus and Cardano best practices within the DeFi ecosystem; the NFT Guild is dedicated to developing standards and building tools for the Cardano NFT community; the UTXO Alliance, which advocates interoperability across systems with UTXO-based blockchain tools and techniques needed to evolve the standard and advance efficacies. These institutions challenge the traditional model by employing blockchain technology to support transparency, decentralization, and accountability.

Decisions about Cardano must be made with input from the community it serves and by their consent. Voltaire advances governance and the community’s existing involvement with a new institution, Intersect, a member-based organization for the Cardano ecosystem; it is an answer to enhancing and better facilitating community contributions. Intersect is a key institution for the ecosystem, bringing together companies, developers, individuals, and other ecosystem participants to shape and drive the future development of Cardano.

Cardano is an open platform that seeks to provide economic identity to the billions in need around the globe. Unlike other approaches to governance, Voltaire seeks to give the billions a voice in their own lives and provide guiding principles that protect the collective voice. These open and community-led institutions allow for difficult conversations to happen and for principled people to shine. This new model for institutions is where people can build their own future by learning, discussing, and coming to an agreement on the way forward together.