¶ Decentralization
Decentralization is a big word that refers to a lot of things, and there are a countless number of DAOs out there, all doing something unique. These are just my thoughts from my one limited, biased corner of the internet.
¶ The Decentralization Buzzword
Buzzword: a word or phrase, often an item of jargon, that is fashionable at a particular time or in a particular context.
Let's begin with a question: do you think "decentralization" is a buzzword?
If I am answering that question, my first thought is "well that depends on what you mean by decentralization.
Or, more specifically, that depends on the context we are talking about."
Ethereum decentralization? Absolutely not a buzzword.
Otherwise? Well...
¶ The World Computer
Ethereum is the World Computer; the purpose of Ethereum is to be a global, credibly neutral settlement platform.
Credible neutrality is THE distinguishing feature of Ethereum.
Without it, Ethereum is just an objectively worse AWS.
Credibly neutrality is the principle that everyone is treated equally, regardless of their status.
It is not enough for a mechanism to be fairly designed, it’s also vital that it can convince a large and diverse group of people that it is fair.
A mechanism is credibly neutral if just by looking at the mechanism’s design, it is easy to see that the mechanism does not discriminate for or against any specific people.
On first glance, this is achieved by Proof of Stake (PoS).
PoS (and all crypto-economic consensus mechanisms) is a set of well defined systems and procedures that dictate how those operating Ethereum (specifically the Ethereum Virtual Machine - EVM) coordinate.
PoS is the mechanism we can look at and agree is credibly neutral.
¶ Human Nature
But here's the things about rules: they are written to be broken.
I am not trying to make a moral judgement, rather I'm speaking to human nature. If we encounter a system of power, [a subset of us] will do everything in their power to capture that system.
If we want to achieve true credibly neutrality, we need to build systems that account for this fact of the human condition.
We must design a system that doesn't allow power to coalesce in a way that can be seized and used to capture the system.
The question is how?
Let's just skip through the pontificating; the reality is that this kind of system is a logical paradox.
Financial/computing systems are artificial creations. Any rule that exists was conjured out of thin air, and only survives by the good graces of those in charge.
¶ A Decentralized Solution
In 2008, we finally found a solution. Led by Satoshi Nakamoto, Bitcoin is the answer to the question: "how can we design a payment app that splits power equally to all participants."
In 2015, Ethereum extended that solution to apply to general-purpose computing.
The gift of Satoshi was to show us that decentralization is the solution to the credible neutrality paradox.
First, we create a system of radical equality.
Then, we get as many diverse, uncoordinated and untrusted parties as possible to participate.
We haven't changed human nature - there are still people that want to control Ethereum and are actively thinking about ways to capture the World Computer.
But we can fight back! All we need to do is get more and more good people to participate.
If you think about it, we don't even need them to be good people.
Imagine if there were only 10 (similarly sized) stakers, each one a bad-faith actor looking to capture Ethereum.
Even if 100% of participants are malicious, PoS will keep Ethereum credibly neutral.
¶ The Internet Metaphor
Think about the internet - under all the jargon the internet is simply a network of computers that share data from peer-to-peer... just like Ethereum.
Now imagine "capturing" the internet. Let's say you wanted to control kinds of information and people could use it.
Maybe you can find some countries that agree with you; get ideological enough and you could probably get the FrEeDoM-LovInG-WeSt on board.
But short of physically controlling every single person (not even server. person), any restrictions will be comically outstripped.
¶ The Value of Decentralization
Ethereum is credibly neutral as long as PoS remains fair, and PoS will always remain fair as long as Ethereum is decentralized.
This insight is the core value proposition of Ethereum; it is the foundation of ETH's value.
From decentralization comes credible neutrality. From credible neutrality comes world domination.
So, let's look at the big picture.
The purpose of Bitcoin is to create a credibly neutral payment platform. The purpose of Ethereum is to create a credibly neutral computing platform.
In both cases, credible neutrality comes directly from decentralization.
And let's be explicit here. Decentralization means that the individual computers that operate Ethereum are in different physical locations and operated by different people.
And within the context of PoS, decentralization refers to the diversity of people staking ETH.
Ethereum is valuable because it is decentralized. Does that mean we should try to add decentralization to everything?
Which brings us back to the question we began with: is "decentralization" a buzz word?
My answer: for Ethereum, NO. Decentralization is critical.
But outside of Ethereum? Decentralization is definitely a buzzword.
A pretty freaking meaningless one.
¶ Decentralization Theater
I could start naming names, but we all do it. Everyone just adds "decentralized" to their project because... that's part of what crypto means?
Now don't get me wrong, there are places where decentralization matters.
For example, I think we should care if Rocket Pool is decentralized.
I think that are interesting ideas around decentralized banks (like Frax Finance or Olympus DAO... although jury's out).
But for the most part, I think that decentralization is a parlor trick DAOs use for 1) regulator cover and 2) community shaping/hype.
I recognize that I have a particularly cynical take, but let's just be realistic about "decentralized" DAOs.
I think of (non-Ethereum based discussions of) decentralization the same way I think of validator-level censorship resistance: a lot of unnuanced, often uneducated, debates about a problem that has been blown way of context.
¶ The Ethereum Endgame
In the depths of 2022, these were the thoughts that shaped my understanding of crypto.
Ethereum decentralization is real. We need to protect it, as it underpins the value of ETH and the premise of the entire system.
The EVM provides a credibly neutral platform.
ANYONE can build ANYTHING within the EVM, that's the magic of Ethereum.
Until December 2022, I thought this was the entire story. We've built the untrusted system so that everyone can go build whatever (trusted) system they wanted!
And then, I met Sreeram Kannan.
Sreeram Kannan is the man behind EigenLayer, the first (but not the last) re-staking collective.
Re-staking is the concept that made this all click for me. Once I understand how it works, the Ethereum endgame clicked into place.
In the Ethereum endgame, ETH is the global currency of trustless trust.
Using ETH, any activity, interaction, data point that requires trust can be transformed into a trustless fact.
All based on a decentralized World Computer.
In the 21st century, centralization is critically and completely failing us.
ETH is how we can coordinate without centralization.
The internet of things, a globalizing economy, a post nation-state world…
Ethereum is inevitable.
¶ Resources
Source Material - Twitter Link