Is DeFi governance really “decentralized”? Speaking from the censorship system


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The phenomenon that DeFi projects are controlled by teams and investors still exists in large numbers.

Original title: “Viewpoint丨Is the current DeFi governance really “decentralized”? 》
Written by: The Ether
Translation: Li Hanbo

Do we really believe in censorship resistance and decentralization?

We are part of the Ethereum community because we believe in a more decentralized and censorship-resistant world. We are tired of interfering in voting by seeing conflicts of interest prevailing in the traditional world, from using social media companies to influence elections externally to banning accounts based on their political affiliation.

Crypto should be a movement that embraces the ideals of anti-censorship and decentralization.

So why are we satisfied with the centralization of the governance framework and the scrutiny of different opinions?

The DeFi team claims to be decentralized and assumes the posture of handing over power to the community instead of special interest groups. But why do we see the opposite happen again and again?

Conflict of interest in the project operation governance framework

Currently, Discourse has become the preferred platform for governance frameworks related to DeFi. Compound, Curve, Uniswap, and almost all other major DeFi projects have a Discourse framework for community members to debate the most important issues facing their agreements.

But what is Discourse actually?

Discourse is a framework management service supported by Silicon Valley traditional investment companies. Some supporters of Discourse, such as SV Angels, are also well-known investors in DeFi projects, such as Uniswap.

Operators of these frameworks pay subscription fees to Discourse in exchange for framework hosting services. In exchange for fees, the operator has full control over its Discourse , including moderators and mute privileges.

In DeFi, most of the time, the project team itself is the operator of these Discourse frameworks, which means that they can control the debates that occur and even exercise the right to mute.

Some DeFi projects, such as Compound, run their Discourse framework by venture capitalists who invest in their company equity.

Below, you will see a tweet from Niraj Pant, who is a general partner of Polychain Capital.

Is DeFi governance really "decentralized"? Speaking from the censorship system

Calvin Liu is the head of Compound strategy, and Polychain is one of Compound’s largest investors . Therefore, because of his early investments, he became one of the largest representatives in Compound’s governance process. In fact, Polychain has the second largest voting rights among all individuals or organizations, including Robert Leshner himself. They are also a very active participant in the Compound governance process and have voted on 10 proposals.

Is DeFi governance really "decentralized"? Speaking from the censorship system

As far as Compound is concerned, my question is as follows: Why do we support a centralized governance framework controlled by the largest representatives? And the debates related to Compound governance mainly take place there .

For other parts of DeFi, why is the governance framework always controlled by the project team?

In both cases, I think there is a clear conflict of interest with the entire community. When the team controls the governance framework, they can review the views of community members, who may wish to change the direction of governance from the founding team.

Similarly, when one of the largest representatives controls the main governance discussion framework, isn’t this a conflict of interest? If a controversial issue arises, will the representative lead the discussion on the governance framework to make the emotions move in the direction of voting that they want to maximize their own interests?

Examples of actual censorship

Of course, some people may criticize this statement, saying that these DeFi teams and their investors will never re-use the censorship system as a solution. However, there are some examples that the censorship system is already taking place. I’m not talking about continuous bans and bans on Discord, Twitter and Telegram, but actually deleting community members/their posts from the governance framework itself .

I want to tell you a story about SF. He submitted an off-chain governance proposal to Curve’s Snapshot and Curve’s Discourse governance framework. The content is exactly what we are discussing today: censorship.

SF created a proposal called “Stop censorship and embrace transparency.” The following is what SF wrote in the proposal.

Is DeFi governance really "decentralized"? Speaking from the censorship system

Is DeFi governance really "decentralized"? Speaking from the censorship system

In addition to publishing the proposal on the Curve Discourse governance framework and on the snapshot page of Curve, our friend SF also shared the proposal in the Telegram group of Curve.

Is DeFi governance really "decentralized"? Speaking from the censorship system

The Curve team responded with overwhelming moderator power. SF saw that his frame account on Curve was deleted.

Is DeFi governance really "decentralized"? Speaking from the censorship system

Curve not only banned SF from their governance framework, but also removed his proposal from Snapshot.

Is DeFi governance really "decentralized"? Speaking from the censorship system

Curve has full control over which votes and proposals can be seen on their snapshot user interface .

Obviously, the censorship system does exist. In fact, these project teams not only control the governance framework, but also control the voting medium through which people send emotional signals. This is a typical example of centralization.

What will happen in the future

If we continue to allow project teams and their investors to control the governance framework, as risks continue to rise, we can only expect more scrutiny and centralization of these platforms in the future.

We need a governance framework and signaling solutions that are not controlled by the project team and its investors. This kind of control is no different from state-controlled media, it is the type we tried to get rid of when we added encryption technology.

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