(2021-02-05) A16z On Crypto Governance

Jeff Amico (A16Z): On Crypto Governance. Crypto protocols are meant to be governed by decentralized communities of stakeholders. Not because it’s more efficient, or important for ideological reasons, but because it’s necessary to unlock their core value proposition: that the underlying protocols will continue to run as designed, and will remain open to anyone who wants to use or build on them, without having the rules shift under their feet.

For crypto startups, transitions towards community governance are complicated, and raise difficult questions around ongoing development, voter participation, and incentive alignment between stakeholders. But they are ultimately necessary in order for the protocols to transcend their original developers and provide enduring value as open financial infrastructure.

our primary objective in governance is to create the conditions necessary for protocols to achieve long-term adoption and self-sustainability

we focus our governance efforts on those initiatives that have the effect of increasing decentralization in these key areas

1. Delegated Voting

which allows token holders to transfer their voting rights to others so that those delegates may more actively participate in governance.

we’ve committed to delegating a significant portion of our voting power in networks like Compound, Uniswap, and others to a wide range of qualified participants.

2. Protocol Grant Programs

We were excited to support the creation of a formal Uniswap grant program last year

3. Early Adopter Rewards

Examples include the early users and liquidity providers on Uniswap and the early developers who built applications on top of Compound.