PHOTREK,LLC and QA-DAO have completed an analysis on Cardano’s community governance proposal, CIP-1694.
We examine the question “Can decentralized communities make superior decisions?”
Our analysis is completed by reviewing threats to decentralization from four quadrants:
External & Public, i.e. government agencies;
External & Private, i.e. competitors;
Internal & Public, i.e. the decentralized governance;
Internal & Private, i.e. capture by a minority
Our conclusion is that while Cardano has made a lot of progress toward a secure, decentralized community the path forward to protect the ecosystem will be arduous. While CIP-1694 creates an open, permissionless governance it fails to provide any protection against capture by a small wealthy minority and thus increases the risks of regulatory oversight. The report makes recommendations to incorporate the principals of Sociocracy, Plural (Quadratic) Voting, and limiting control by multipool stakepools into the governance design.
We welcome the communities feedback on this analysis.