On the Modularization of Decentralized Governance

Web3 applications — from decentralized finance and compute, to the continued process of blockchain consensus — is all about coordinating different parties, who do not know each other, towards a common goal. The aim can be to run a lending market, asset or derivatives exchange, digital gold, or any other potential service.

There’s quite a bit of confusion around the terminology of crypto protocol governance, decentralized autonomous organizations (DAOs), and even how governance for blockchains like Bitcoin and Ethereum works. Ultimately, everything is run by human consensus, and the rules for how the service operates (including the rules for changing the rules) are enforced by the owners or token holders.