On The Other Side ep 33 - DAO Mini-Series: Centralization in decentralized orgs
Primer: Is centralization necessarily bad? In this episode of On The Other Side, host Chase Chapman speaks with Aaron Dignan and Rodney Evans from the Brave New Work Podcast on various points of consideration regarding centralization and decentralization in decentralized organizations.
Spectrum Of Centralization/Decentralization In Self-Managing Orgs
The pendulum swing from one end to the other end is always present. It is always a source of discussion, contention, and ideation
The organization has to decide what to centralize and what to decentralize:
What are the methods by which we make these decisions
Are there any principles or heuristics?
Have to ask yourself whether centralizing an aspect helps the organization achieve their purpose
Example:
Every DAO has one primary communication channel (e.g. Discord, Telegram, etc.)
DAOs that have multiple communication channels make it very messy for the community to follow
“And if somebody was like, no, we're gonna have 10 different chat products. We'll be on Slack and Discord and Telegram and Facebook, there's no way you could coordinate effectively. It would be a disaster, and the fact that that was decentralized would not help.”
- Aaron Dignan
Framing Of Organization Debt In DAOs
The core team tends to have a lot of control over the flow of resources in a DAO
DAOs are generally centralized from a treasury management perspective
“I think speed, cost, and risk are probably the three horsemen of the centralization apocalypse.”
- Aaron Dignan
There’s a mix of principles and variables at play:
What does the risk look like?
What does the speed issue look like?
What does the cost and cost efficiency basis look like?
Quality of work
Have to have a discussion to figure out what to prioritize
“So I think often the argument for centralization is if the decentralized team or whole organization can't afford a high quality of thing, and if they pooled resources with others, they could, that's a really interesting argument for centralization.”
- Rodney Evans
Organization Design
If you are going to centralize power and authority, it has to be done in a decentralized manner where people agree to it beforehand
If there’s no roles or structures for people to consent to, one has to start by creating them first
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