Vitalik Buterin recently published his feedback on Nathan Schneider’s article, in which the Professor of Media Studies at the University of Colorado Boulder addressed potential limitations surrounding cryptoeconomic approaches to blockchain governance.
Triggered by the article, in which Schneider outlined the major avenues for improving the governance systems’ usefulness, the Ethereum (ETH) co-founder wrote up comprehensive feedback, offering his own perspective on what is needed to move beyond “financialization.”
Proposing less-economic forms of governance
Schneider addressed the specific limitations of governance possibilities introduced by cryptoeconomics, while “drawing on earlier critiques of how economic logics can erode democracy.”
While admitting that “by integrating cryptoeconomics with democracy, both legacies seem poised to benefit,” Schneider warned that “the autonomy of cryptoeconomic systems from external regulation could make them even more vulnerable to runaway feedback loops, in which narrow incentives overpower the common good.”
In his article, Schneider contends that “to overcome these limitations, designers should envelope cryptoeconomics within a logic of politics capable of seeing beyond economic metrics for human flourishing and the common good.”
He concluded that in order for cryptoeconomics to “achieve the institutional scope its advocates hope for, it needs to make space for less-economic forms of governance.”
Buterin’s perspective on moving beyond “financialization”
“Notably, Nathan’s favored solutions do not try to regulate coin voting. Instead, they try to limit the harms of its weaknesses by combining it with additional mechanisms,” commented Buterin, who focused his feedback on breaking down the collusion-prevention aspect of the blockchain governance systems.
Also a good opportunity to expand on the language of collusion prevention.
— vitalik.eth (@VitalikButerin) September 26, 2021
Despite largely agreeing with Schneider that “blockchainized” should not be equated with “financialized,” Buterin insisted on the idea that “finance” provides an anti-collusion “framework.”
While recognizing Schneider’s suggestion, which called for “more hybrid approaches combining ideas from both economics and politics,” Butterin underscored “there’s a lot of subtleties involved” in designing blockchain systems that would account for “economization” and “neoliberalism” critiques.
“Finance can be viewed as a set of patterns that naturally emerge in many kinds of systems that do not attempt to prevent collusion. Any system which claims to be non-finance, but does not actually make an effort to prevent collusion, will eventually acquire the characteristics of finance, if not something worse,” according to Buterin.
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