Is Governance About To become The Leading Crypto Fundamental?

I’m working on a theory that the next phase of cryptocurrency growth will be almost entirely driven by governance innovation and not so much core technology.

Looking at the last ten years of crypto, we have gone through several distinct phases that go something like this:

• Bitcoin Phase: Just make the basic technology secure and show it works. Hugely successful.
• Ethereum Phase: Add additional functionality to enable DeFi and other applications via Smart Contracts. Hugely successful.
• Shitcoin Phase: Massive experimentation in utility and new approaches for tokens, exchange tokens, governance tokens, Realworld assets and more. Also included substantial advancements in stable coins. Throw NFTs in there also.
• Scaling and Infrastructure Phase: We are still in this period. Biggest constraint to growth has been cost of blockspace and performance but we are figuring this out with various scaling solutions.
• Coordination and Governance Phase: This is where I think we will go next

But why?

When I look at Ethereum and other chains, I view these ecosystems in terms of the total availability of talent dedicated towards furthering the aims of those chains.

My instinct is that the chain or ecosystem which is best able to mobilize its entire capacity of community talent in the most efficient way is going to win.

If you have the 10,000 most talented developers and you can only accommodate 100 of them, your ecosystem will be out performed by an ecosystem of 500 developers which utilizes 400. That’s what governance is meant to do.

In a world where the core technology and scaling infrastructure are solved it would seem that Governance and coordination technologies, cultures, tools and leadership will make the difference.

Other options include BD, developer relations, marketing, luck, sales and deal making. It isn’t impossible that the ecosystem which makes superior use of AI will win, as well.

For the time being, it seems that enhancing governance has the highest potential. At least for the next few years, before AI reaches further stages.

So who seems to be set up to win in a world where governance becomes increasingly important?

I think it can only be a race between Ethereum and Cosmos. Bitcoin long ago dropped out of this aspect of the race. Avalanche and Solana seem more centrally managed. So only Ethereum and Cosmos seem to have the potential to be serious contenders.

My personal instinct is, based on being in the Cosmos ecosystem, that Cosmos has the best structure fundamentally to lead here.

In fact, I view the Cosmos Hub as effectively being the first ever valid implementation of a true Network State ever created. This is a major accomplishment.

It may not be perfect but it sort of works.

And if you have something that sort of works and can be improved on which might act as a true governance advantage, that can count for a lot.

My question on the Ethereum side is: What is the governance of Ethereum? If something happens to Vitalik, is there any? There are obviously innumerable smart people working on Ethereum, but is there any core structure capable of mobilizing the total capacity of the talent in Ethereum and directing it towards a shared goal?

Maybe GitCoin.

On the Cosmos side, I see a compelling setup whereby dozens of forms of governance can be tested across multiple chains to find the most effective design. Tools like DAO DAO might be used to innovate far ahead.

There are already signs in Cosmos that a governance mentality is on the rise.

It is too early to say for sure, but I feel strongly that if Cosmos ends up growing by a factor of 1,000 in coming years, it will be solely for the reason that novel governance is discovered in this ecosystem in the next few years which best mobilizes the collective abilities of what we have today.

If Cosmos is able to become a laboratory for innovative governance and rapidly A/B/C test new methods, there is nothing but upside that I can see.

Does to have to be the Hub? I think at this stage it doesn’t matter where it happens so long as the total level of governance testing and innovation within Cosmos becomes much higher and learnings are cross applied. That is likely best done across many chains.

The formation of gatherings and groups dedicated to studying governance innovation will also be tremendously helpful.

The leader in governance may well become “the leader.” I think Cosmos has a major opportunity to step up here.