TL;DR Decentralized decision making and execution is inefficient and ineffective and poses a great risk to the Algorand growth and competitiveness moving forward.
- The goal of this note is not to claim that decentralized governance cannot be useful in any form but to encourage deeper discussion and research among the Algorand teams and the community before moving full-speed in that direction.
- AFAIK there is not enough public information about how Algorand Inc., the Foundation and network are supposed to work and influence each other. For example I asked a number of questions here.
Staking Algos is just one requirement for becoming a decision maker. It only ensures there is some interest alignment with the network success. However, it doesn’t guarantee anything about the quality of decisions or whether they are part of a broader long-term strategy. First an important part of decision making is coming up with the decisions that need to be made, which is missing and is left to proposal owners and not under a unified strategical plan. Second, decision making for a global monetary/DeFi network is a high-profile job which requires dedicated time and effort, expertise and knowledge. The majority of participants (95+% if not more) are not qualified for this role. Also the governance reward is too little for the small group of qualified participants. Third, there are too many participants, with many different backgrounds and just ensuring enough information flow so they get to a common understanding of problems/solutions is difficult (if not impossible) and a slow process.
The damage is not limited to decision making and execution but also it causes a lot of unhappiness and sadness within the community, leading to many divisions and eventually brain/money drain. No sane expert would want to waste hours and hours his/her precious time discussing basics with random people so may or may not move the needle just a little bit. As much as people get excited when sometimes the process works, stepping back there is little justification for it particularly when a centrally govern competitor (say Binance for example) can move one hundred times faster. Decentralized governance is not a goal but a means so its cost should be lowered as much as possible or even alternative approaches are used when possible.
I had the chance to work with the Dash community very closely for a few months. I observed many of these issues in practice. Dash governance benefits from interesting ideas (for example there is a treasury and the network can own companies and central entities) however it still suffers from serious issues and fails in addressing real problems effectively and quickly. The result has been that Dash is not able to gain its deserved position and value in the market even when it still provides cheap/fast(1-2s)/scalable transactions. In particular not only the community has not grown enough but there has been a huge brain drain.