The Ethereum method of governance isn’t the only one in use, and a small number of projects take a different approach, known as on-chain governance. And it’s also easy to see how far-reaching, draconian regulation could easily decimate such an ecosystem that has no wholesale way of making itself compliant. In doing so, it split the Ethereum blockchain and community forever.įrom this perspective, it’s easy to see why a decentralized financial ecosystem based on such a platform makes regulators uneasy. Only once has the Ethereum governance intervened. Over the years, Ethereum has been misused to issue scam tokens, set up unstable smart contracts, and had millions of dollars worth of value drained from it in more than 100 hacks.

However, if we take Ethereum as an example, Ethereum governance rarely extends to what happens on-chain. On many platforms, like Ethereum or even on the Bitcoin blockchain, these matters are handled off-chain between a group of core developers and the miners. Let’s talk about decentralized governanceīlockchain governance is a somewhat arcane topic, but anyone who’s asked “Who controls a blockchain?” will have touched on some aspects of it.īeyond the question of how transactions are confirmed, there are broader questions of the functionality that the blockchain can support, how it gets upgraded and developed, and how incentives are distributed, among others. And the discussion becomes more intricate when we move onto the question of, unlike FTX and Binance, decentralized platforms and applications. Regulators are increasingly circling the crypto markets-an inevitable development now that cryptocurrencies are a multitrillion-dollar asset class. In late July, Sam Bankman-Fried, CEO of one of the larger crypto exchanges, FTX, announced that the company would reduce the available leverage from 100x to 20x to encourage “responsible trading.” Soon after, Changpeng Zhao, CEO of rival exchange Binance, followed suit. In fact, crypto’s biggest players are beginning to take steps to reign in policies that represent a more extreme deviation from standard practice in the mainstream markets. And indeed, back in the heady days of the 2017 ICO boom, that description was perhaps justified, considering the many stories of shady operators selling get-rich-quick schemes to wide-eyed newcomer investors.īy and large, those days are now behind us. The cryptocurrency markets are often referred to as the “Wild West” of finance and fintech: A dog-eat-dog world, somewhat hazy from a legal perspective, too complex to even begin attempting any kind of order or control. Freelance Writers: How To Pitch Crunchbase News.Something Ventured: Startup and VC Diversity.

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