I'll take the opposite side in this debate, somewhat.

I think most DAO's today are nonsense larps not because of decentralization but because their participants don't have a clue about business, and the teams have no idea how to set up strong governance systems.

That said I believe DAO's are absolutely the future of this space and many projects are decentralized, but they've decentralized without the right systems in place to manage that and without the right knowledge.

Many large companies still think you can't work remotely nevermind in a decentralized fashion, but that simply isn't true.

I spent the last decade working for remote companies many of whom are some of the most effective operators in the space.

But, and this is a huge BUT, it takes an incredible amount of planning, systems design, goal setting and coordination to reap the benefits that such a system has.

In a decentralized system it also means you need to align the incentives of each individual with that of the protocols key success goals.

Which right now doesn't happen much with token price.

That's actually one of the advantages of selling to closed-end fund VCs who understand its best to focus on a project and not a token price for a long time.

I think this can be done with tokens, but it runs into the same problem that public stocks see where people over optimize to near term returns.

Most teams have decentralized without setting up the right systems to continue to innovate, build a product and align the incentives of all users in a way that lifts up the entire community.

Most DAO users will shill that their DAO works great, and I'm sure it does when things are going well, but most of them fall apart when things aren't going well, and that's a huge hurdle for us to solve in this space.

This is actually where CEHV plans to spend a lot of its time with portfolio companies.

Where funds like Paradigm have researched teams that (among other strengths) are very focused on the tech and primatives, we hope to dig in deep with teams on governance and incentives.

We believe that the only way that crypto and defi can scale to support hundreds of millions of users is by figuring out paths to have better decentralized governance and team coordination.

I think we have to remember there is a reason countries don't run on direct governance.

I don't think I'd trust my neighbors to make decisions on super nuanced economic policy.

But ideally they should be able to elect someone they believe is qualified and matches with their goals.

I think that's why @synthetix_io and @MakerDAO are probably some of the strongest governance systems right now.

I think DAOs are decentralized, they are the right choice, and they are critical to this space.

But, while people are involved and contributing, I think most people in this space have no idea how to contribute productively.

It's like when highschool kids start a business, sure some people might get it, but most of them are just playing business and have no real idea what to do.

(I'm sure the @RariCapital team have school peers who have no right running a lemonade stand.)

These systems are critical to get right, but currently they are often selfish, short sighted and lacking any proper process.

PS - if a fund doesn't take time to actively vote in governance or delegates high amounts of votes to people with no track record, accountability or real world experience, dump them.

The goal of DAOs is active participation, not passive investors.

We should *ABSOLUTELY* expect that same standard from VC firms.

They are supposed to add value by being experienced operators instead of passive investors who delegate their responsibility to anyone.

I'll give credit where credit is due that I think @a16z has started to realize the problems with their initial delegation approach and has started to build out a more responsible delegation program, but, I still think serious firms should have this expertise in house.

• • •

Missing some Tweet in this thread? You can try to force a refresh

Keep Current with Adam Cochran

Adam Cochran Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!


Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @adamscochran

30 Sep

If you don't follow US politics, let me just say that this debt ceiling stand-off is an utter shitshow right now.

Political games are being played all over the spectrum and there is a signifgant level of disarray and divide here.

Do I think the US government will default on its debt?


That would be the most catastrophic thing to ever happen in modern finance and would impact the global economy for a century.

I think we'll avoid that.
Read 11 tweets
29 Sep

It really annoys me, how nearly every G7 central bank chief thinks that consumer price inflation is transitory and pricing will restore once supply chains resolve.


When is the last time a business *lowered* a price you were already paying?

If a business had customers at a higher price, they won't lower it even if their costs go down.

Our financial policy is made by people who don't even remember what it is like to operate in the real world any more.

Its political games and ivory tower policy that is playing with the livelihood of everyday people.

Their decisions impact our mortgages. They impact the cost to put food on your families tables or the ever rising cost of that first home.
Read 4 tweets
27 Sep

I love DyDx as a product, it shows the huge value that onchain perps are going to have. But, I think its overvalued compare to the upside potential of others in the space.

China's push on CEXs was a huge gift to the space, that while up large, I think is just starting.

Unlike a lot of projects DyDx's token is strictly governance. There will be no fee capture, no use case, no buy backs.

All the trade fees actually go to equity holders, and unlike some other systems these aren't variables in the contract that the DAO can vote to change

The $20B FDV puts it on par with FTX, which if it can continue to grow its volume and maintain this level of liquidity depth, may actually be only minimally over priced.
Read 23 tweets
25 Sep

Feels like MKR, once a defi darling, has kind of had its days behind it.

We're seeing a pretty big shift that I think highlights really interesting lessons for defi projects.

$DAI won out by being novel, innovative and most importantly defining for the ecosystem. The $MKR team created the foundation tooling and standards for many of the practices we have in defi today.

But, as they've grown and further decentralized they've built great procedures for managing the existing DAO operations within a framework, but not for fostering innovation.

Which is a classic startup problem only amplified by unstructured systems.
Read 21 tweets
22 Sep

Just save your money like its 1965, just don't buy coffee away from home and you'll totally be able to buy a house and live the American dream.

"Save $5 a week and get 8% interest"


...crazy high interest for equities in normal years, and would result in $130k at retirement.

Given the 380% inflation in the last 40 years, that'd be worth around $34k in same year buying power.

So lets assume you live 20 years past retirement, basically you get the equivalent of an extra $1700.

Thank god you gave up that coffee and pulled up your bootstraps...
Read 4 tweets
17 Sep

So we don't know the exact details yet, but apparently the Treasury Department is expected to put up specific sanctions targeting crypto related to ransom payments...

BUT, it seems like its good news 👇


Based on the snippets below the sanctions are expected to be focused, aimed at specific malpractice rather than something that is against the entire industry/asset class.

We don't know what those specific restrictions are, or who/what/why they are targeting, but the fact that they are specific and targeted, specifically to not cast a wide net is a HUGE improvement from the last kind of action we saw alluded to from the treasury.
Read 8 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!