« Other digests

Redecentralize Digest — September 2021

In this issue:

Cryptoeconomics as a Limitation on Governance

Nathan Schneider’s recent (draft) paper Cryptoeconomics as a Limitation on Governance investigates blockchain-based governance systems. Abstract:

“Governance practices in distributed-ledger systems have grown increasingly diverse and diffuse, while retaining a commitment to cryptoeconomics—the use of economic incentives to guide user behavior, in tandem with cryptographic technology. In the space of a few years, cryptoeconomics has introduced advances in techniques for self-governance. But reliance on cryptoeconomics also introduces limitations on governance possibilities. Drawing on earlier critiques of how economic logics can erode democracy, this paper identifies specific limitations that cryptoeconomic governance faces. It contends that, to overcome these limitations, designers should envelop cryptoeconomics within a logic of politics capable of seeing beyond economic metrics for human flourishing and the common good.”


“Political institutions are domains for homo sapiens before homo economicus. Even if politics cannot—and arguably should not—fully depart from economic life, what distinguishes politics is its capacity to notice and address less-economic considerations. While a country’s taxation policy utilizes economic nudges, for instance, lawmakers must generally rationalize it according to conceptions of the common good, rather than optimizing for financial metrics.”

The paper got wide reach as Ethereum-creator Vitalik Buterin wrote a reaction to it, in which he largely agrees while extending on the topic of collusion:

“The language of collusion prevention can be helpful for understanding why cryptoeconomic purism so severely constricts the design space. “Finance” is a category of patterns that emerge when systems do not attempt to prevent collusion. When a system does not prevent collusion, it cannot treat different individuals differently, or even different numbers of individuals differently: whenever a “position” to exert influence exists, the owner of that position can just sell it to the highest bidder.”

Vitalik concludes:

“Blockchain-based contraptions have a lot to offer the world that other kinds of systems do not. On the other hand, Nathan is completely correct to emphasize that blockchainized should not be equated with financialized. There is plenty of room for blockchain-based systems that do not look like money, and indeed we need more of them.”

Ecological awareness

Kelsey Breseman discusses Ecological Awareness for the Decentralized Web.

The obvious culprit is of course proof-of-work blockchains:

“The basic pattern is the same across the technologies: proof-of-work is an inherently and intentionally energy-inefficient process that is the basis for Bitcoin’s stability as a currency; as the value of the currency rises, mining (which performs the energy-intensive proof-of-work process) becomes financially incentivized; high energy consumption increases carbon emissions, oil and coal extraction and burning, and so on. And so, decentralized web technology contributes to the destruction of habitability on our planet.”

Using renewable energy might sound like a solution, and is necessary, but much more important is using less energy: “though decarbonization of our energy infrastructure is an important objective, any proposed solution that doesn’t attempt to decrease energy demand is underwhelming.” Ethereum’s ongoing transition from proof-of-work to proof-of-stake is a laudable move in this regard.

The deeper point however is to take a second to think why we are pursuing our particular projects, and “double-check the theory of change: do our technologies really serve the goods they claim to? How, and how can we ensure they do?”

“I remain attracted to the decentralized web space because I see so many people in it who are both thoughtful and taking action. People are reading books about power, about money, about justice, and making new protocols — both technical and human — that seem like they could fundamentally change the way our world works, and the way we work together within it.

But how can you know what is a sci-fi fantasy and what is grounded truth? As an expatriate of the Silicon Valley tech world, I know how easy it can be to get embroiled in the pitch: working so hard to earnestly convey that your startup is the key to changing the world. It’s a machismo-filled drive to oversell in order to stand out, to raise your VC seed, such that you yourself become over-convinced that the niche technology you’re developing is the one true way to save the world.”

Backchannel petnames

Research group Ink and Switch prototyped Backchannel, an alternative to the ubiquitous concept of user profiles, both removing the need for a trusted third party and blocking various forms of impersonation attacks. The paper is a nice follow-up to the group’s previous paper on local-first software, a must-read for decentralised software developers/designers (also covered in our digest).

“In standard user profile design, users are assigned a number in a database and can personalize their public identity. These profiles are usually owned, controlled, and moderated by a single authority. You have used one today: a profile photo and “real name” for yourself, locked with a username, password, email address or phone number. This design is ubiquitous.

However, user profiles present significant challenges when used between small sets of trusted participants. They are vulnerable to social engineering attacks, context collapse, and depend on access to cloud resources through a trusted third-party. In this article, we propose an alternative approach that replaces self-described user profiles with trusted digital relationships.”

An interesting starting point is that people do not usually look up each other’s accounts by their user names, instead using an existing communication channel to pass a ‘share’ link or show a QR code in order to connect or collaborate. Why then have user names and profiles at all?

“Collaborative applications could leverage this already-established mental model as the primary method to share access to resources. Then, we could remove this dependency on a namespace and use relationship-based identity instead.”

The proposed solution lets people choose their own names for their contacts (commonly called a ‘petname’ system), much like the personal phonebook maps names to phone numbers — except that now, there are no phone numbers, but rather a unique key that is generated for each relation. Like with phonebooks however, the scope was limited to 1-to-1 communications, as group communication poses further design challenges.

The authors prototyped several apps using this approach and conducted user research with them.

“Notably, very few users remarked that they did not need to sign up for an account to use applications with Backchannel’s relationship-based identity. Once they were presented with the fact that they did not need an account, they were pleasantly surprised and found this to be a positive part of the design.”

While the paper covers practical matters, it points to a more significant change in software design, concluding:

“With this research we propose an alternative point of view on digital identity altogether. We see great potential for relationship-based digital identity to replace user profiles in applications designed for small groups of trusted participants.”

New Public / Unfinished

New Public is a new publication “for better digital public spaces”. The theme of its magazine’s first edition is decentralisation, with “original stories about what forests can teach us about the web, how couples navigate decentralized sperm donation networks, why “less is more” when it comes to social media relationships, and much more.”

The magazine was released at the Unfinished live event in New York, which made an extravagant show around ethical digital tech; videos are online (though only viewable with Vimeo account) including e.g. a session by creators of the magazine and Anil Dash’s critical view on the tech industry.



For more events like these, check out and subscribe to the dweb.events calendar!

About this digest

The Redecentralize Digest is a monthly publication about internet (re)decentralisation. It covers progress and thoughts relating technology and politics, without ties to a particular project nor to one definition of decentralisation — figuring out its meanings and relations is part of the mission.

This digest was written by Gerben, with thanks to Ian and others for all tips & suggestions.

The digest’s format and content are not set in stone. Feedback, corrections and suggestions for next editions are welcome at hello@redecentralize.org. We don’t spy on our readers, so please do tell us what you think!