The Breakdown - The Messy State of Crypto Governance with Jito Foundation's Nick Almond | The Breakdown

Episode Date: May 18, 2026

Nick Almond of the Jito Foundation joins David to walk through why DAO governance is a mess, what “pragmatic decentralization” looks like in practice, and how the CLARITY Act will reshape governance going forward. Enjoy! TIMESTAMPS: (00:00) Intro (01:22) Why Governance Matters (03:43) Token Voting (05:12) Delegates and Multisigs (08:56) Nexo Ad (09:30) Sub-DAOs and Specialization (11:33) Governance Tokens Origins (15:47) Pragmatic Decentralization (18:22) Cosmetic Votes and Value (20:37) Nexo Ad (21:35) Arbitrum Governance (25:59) Regulation and CLARITY (29:11) Bitcoin Governance Lessons (34:03) Meta Governance and Agility (36:48) Tokens as Equity Future (39:41) Closing Thoughts FOLLOW THE SHOW › David — https://x.com/dcanellis › The Breakdown — https://x.com/TheBreakdownBW › Nick Almond — https://x.com/DrNickA › Jito Foundation — https://x.com/jito_sol SPONSORS › NEXO Nexo is the premier digital wealth platform. Receive interest on your crypto, borrow against it without selling, and trade a range of assets. Now available in the U.S with 30 days of exclusive privileges. Get started at http://nexo.com/breakdown Get top market insights and the latest in crypto news. Subscribe to the Blockworks Daily Newsletter: https://blockworks.co/newsletter/ DISCLAIMER As always, remember this podcast is for informational purposes only, and any views expressed by anyone on the show are solely their opinions, not financial advice.

You have all of the kind of dramas that happen in governance elsewhere in crypto, largely because they're trying to do more than Bitcoin. If you're trying to do more things, your governance has to move commensurate with what you're trying to do. And largely, what we've tried to do is more than the governance is capable of doing. And that's where it's gone wrong. Brian at Gito says this perfectly. It's basically like governance is a muscle, decentralization is a muscle, and you have to

train it. And if you try and do something that you're not fit to do, you will fail at it. So it's just about being much more cautious and incremental. in governance, starting from not doing much and getting more advanced over time, rather than just saying like, okay, the Dow is going to run the ecosystem now, and then it just gets plundered and it all goes wrong. This episode is brought to you by Nexo. Step into a new era of digital wealth.

Earn interest on your digital assets. Borrow against them without selling and trade all in one platform. Get started at necto.com slash breakdown. Nothing said on the breakdown is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are opinions, not financial advice. Host and guests may hold positions

in the company's funds or projects discussed. Welcome everybody to The Breakdown. I'm your host, David Cinellas. With me is returning guest, friend of the show, Nick Armand, head of governance at the Gito Foundation. Thanks for coming with us again, Nick. Yeah, thanks for having me on, mate. It's good to see you again.

Yeah. So, like, I wanted to get you on because we've had you on the show a few times, but we haven't explicitly talked about governance and kind of unpacked, not only your philosophy, but just like the state of governance across crypto and there's been like four or five instances in the past six months or so where governance has come up in kind of weird different ways like we had the arve situation

basically trying to figure out where where revenue and cash flows should go and then we had the arbitram security council clawback of some funds related to the kelp Dow attack and there was some other ones like scroll was was fiddling around with its Dow because it was too expensive like the deli and stuff like that as well so i just kind of wanted to get you on to to shoot the shit about all of that stuff um and try and figure out like what what your what is your mindset and what is your opinion right now of of of governance in crypto is it is it too messy or is or is this kind of going as it should um i mean it's definitely too messy you certainly couldn't say that it's high functioning and high quality governance across the systemic across the industry.

And it is a bit of a mess. And it is an interesting time because effectively these governance structures are being tested in quite extreme ways, actually. And we're finding the limitations of them, the frailties of them. And it's kind of emblematic of a broad lack of care about the governance setups that we've taken over the years, it's not particularly being brilliantly done, largely just a kind of neglect of one of the least sexy sort of areas of crypto, I would say. Yeah, because it's really difficult, because it is something that we, perhaps we spoke about it

a couple of months ago. And it's just like Dow's served a function because we needed to decentralize a lot of the, a lot of the decision making around, well, what protocols should spend money on and who should make those decisions. And then, I mean, it's not a new problem. I know Vitalik has been going on about this forever that, you know, token weighted voting might not be the best way through it. But it's still the norm. Like, that's still the default way to make decisions. And I mean, we could just start with the devil's advocate, I guess. Like, it absolutely makes sense that, that entities or like groups of people or individuals with the most amount of capital given to, like, the most skin in the game should

should have the most say in what happens with at least the DOWS and how protocols are stewarded and stuff like that. Like, do you agree with that? Like, how do you view token weighted voting right now? Because it's very different than what it was like five or six years ago compared to now. How are you looking at it? It kind of is and isn't, right? Like, one of the main problems is we got kind of locked in to some fairly archaic smart

contracts for how to do DOWs. all the way like mostly we've been forking the compound governor contract which is something that you know compound the defy project made in like maybe 2020 maybe 2020 maybe 2019 so we haven't really upgraded a lot of the infra for several years just because it wasn't particularly you know an exciting thing to invest in I think the kind of more philosophical point you made there about the people who put the most money in should be the ones who have the most say is basically be where the philosophical ground is. Like, is that true?

Should that always be the case? And if it's not, then how do you get away from it? And there's certainly been a desire for a long time to move into more like non-financial or reputation-based systems that would change those structures. And that's still to be developed, really. People have tried. And in many cases we do, right? So in reality, the sort of de facto power bases are these multi-six.

that are distributed across protocols across the industry. And actually, those multisigs, which are a kind of quorum-based decision-making system, effectively like MN decision-making, that's really what the core governance is in many protocols across the industry. So it's not like we've even got full token-weighted voting in many cases as well. Yeah, because of the delegate system. Yeah, and like, so you can look at the,

So we've had this basic delegate-based, one-token, one-vote, delegate, public democracies, you could call them. Now, that means you're effectively distributing power and control of the protocol to whoever's holding the tokens. And then whoever's holding the tokens and who can be bothered to turn up and vote, which is the kind of next sort of major lever on who controls the things. And largely, we just kind of air-dropped these tokens. tokens rather pseudo-randomely into the market. And the structure of power of these DAOs was basically who was around on AirDrop Day. So I ended up as a reasonably large delegate and a few of these things just by saying delegate to me on AirDrop Day. And if I'd done it a day later, I would have no say in the Dow ever. So that's, and that was largely the case.

Like I don't have any skin in the game for Arbitrum, for example, just because I just didn't settle my delegate profile. And now it's basically impossible to get in. if you like. Because it's really difficult because I mean a lot of this like it I don't want to go on a segue too much but it's it's quite similar to this this this idea of having a decentralized network even from the validator set because it's very difficult to have a really decentralized validator set. So we had, you know, delegated proof of stake and then we've had like the Cosmos system that is essentially where you have one group of validators and then they can validate all these small networks and the trust assumptions roll up to the main valid I set still.

And it's these ways of having a decentralized network with still just one small group that is doing all of that, all of that work and all the hardware and the stake to do it. And then so the Delagis system is like an extension of that because it's very difficult to get a large group of people that are motivated to vote on all of the minutiae of Dow governance and protocol governance. So it's like it's a nice idea that we could have token weighted voting or the people with the skin in the game. And then even the delegates that would be decentralized enough

that you could delegate to a bunch of people and they would be motivated then to stay engaged. It doesn't seem realistic anymore, especially because governance tokens, they're just falling out of favor. They're not super interesting to hold anymore because the price is going down. So what is the motivation then to even hold enough stake to then one delegate

or even make the decisions yourselves and vote how you want to vote? Is there any alternative here? Because a lot of these, the governance issues that have come up, a lot of it is like, well, I mean, uniswap clawed-back delegate tokens that it had put out into the system. So, like, well, now we need to take control of it properly. Is there any alternative? Maybe I'm not up to speed with the alternatives,

but how are you thinking about what could be a next phase if it isn't governance token voting? Step into a new era of digital wealth with Nexo, the premier digital assets wealth platform. Earn interest on your digital assets. Burrow against them without selling. Trade a wide range of cryptocurrencies, all in one place. Nexo is now available again in the US

with an evolved product suite tailored to today's market. For a limited time, new U.S. clients can unlock unlocked 30 days of exclusive wealth club premier benefits, including enhanced interest rates, reduce borrowing costs, and up to 0.5% crypto cashback on trades. Get started today at nexus.com slash breakdown. As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. Yes. So I've thought about, you know, there's lots of different possibilities for ways that which you can structure power in these systems that is not simple, linear plutocratic voting.

It's a very simple one is to move into like subsidiary structures. So one of the things that we do at Gito Dow is use sub-Dows. So we have a CryptoEconomic Sub-Dow and a Governance Sub-Dow and a Sub-Dow related to the community. They have domain-specific focus.

So they kind of like the focus of the the crypto-economics one is to build mechanisms that integrate into the Dow to the value accrual mechanisms, for example. And that's all it does. So you can, and Lido does similar things of a very technical decision making around their protocol as well.

So really what you can do is take a subset of down members and put them into domain-specific structures and then try and hold those substructures accountable through like delegated authority around specific parts of the protocol. So really one of the things, that is needed is specialisation. So for a lot of the time, we just presumed the Dow would do it. Well, the Dow will do it.

Now, can the Dow do it? Well, the Dow is a smart contract, right? The Dow is just simply a smart contract that can do any transaction based on what the on whether someone proposes something reasonable to do in the voters vote on it. It doesn't mean it can oversee things or do specialist things and consequently it needs to specialize. So I think the kind of future of Dow governance, which I've been saying for many years,

is these kind of nested substructures that have domain specificity. And largely we just kind of got stuck in this monolithic Dow framework just because we didn't really invest that much time and effort into building the next generation of it. Is there any way to remove the need for exposure to a governance coin, to make these functions?

Because like, I mean, the simplest way I could do that, well, it's like you do it with stable coins, but then you're requesting people to hold a bunch of stable coins and then maybe, you know, like lock them in a smart contract and then you would essentially have weighted voting again, but based on the stable coins that you have locked in this contract. And then that's also locked capital that wouldn't be doing anything either.

Definitely a mechanism that you could use where, you know, people commit capital for a say, and it doesn't necessarily need to be some governance token. One thing about governance tokens is they were a kind of artifact. If you remember the kind of useless governance token era. A lot of these were kind of used as kind of regulatory arbs to find a way to launch token. So that was the primary driver.

What was the main utility of the governance system was to get a token into the world, because that had become the investable asset. And consequently, the governance piece was not really the driver and consequently was kind of neglected. But governance utility should be just a base level utility. It's kind of an artifact of the early governance tokens that came out of the likes of Swiss associations. It was a way for a token to have utility because you could go and take it to a smart contract to vote with it, thus utility token. So a lot of the time the governance has been a kind of secondary thought to actually create the token.

So it doesn't mean none of these things aren't possible. There's a huge like kaleidoscope of possibilities for how you could use blockchain affordances to do decentralized governance. We just haven't cared about it enough. Now, I do think the recent moves are going to start making people care about it because the level of unsophistication around the mechanisms are being called into question. So you need these things to decentralize, right? So it's either you have a central team, you know, governing a token economy, which I'm still think is not going to, you know, even with the current regulatory environment, is not going to be a ten or position long term. You need something like a Dow in order to credibly decentralize

the protocol. There's something to be said for how slow it makes everything as well, which is, it's quite difficult. You do have, you do have protocols, you do have, you know, teams that don't have a Dow that ship really quickly, they can make decisions, and they are tending to be the market leaders in some aspects. So, yeah, it's this thing about, yeah, decentralized stuff does move slowly. I just wonder a way through that. And it's a fragmented thought. It's just that, you know, open source projects in general, what to me, like a weird irony of crypto is that, yeah, everything is meant to be as open source as possible.

But at the same time, they are products. There is like financial exposure that you can gain by interacting with open source protocols. And Linux is I think the best analog to it, but it's not like Linux itself is like a hyper product in the same way that you do have crypto products that are built on this open source development processes. So it's like it's this,

it's this weird thing where we do want to signal that we do adhere to like open source development principles but we also need to move very quickly uh in order to for teams to compete with each other even and let alone competiments against tradfair and everything like that um so it's like i mean i mean to me it's it just seems like dows are holding a big part of the market back uh but i suppose that is how much you buy into, you know, the long-term necessity for those to function. Yeah. Do you think that they're holding parts of the space back, or is it just that we need a better way to do dows?

I don't think they're holding the space back. I think there's, so this kind of trade-off between sort of product velocity and decentralization is one of the kind of central things that we'll be wrestling with going forward, really. There is a tension here. This is something I'm working on currently with Gito. We're trying to create a framework called pragmatic decentralization. And it's about finding the right balance of delegated authority over a protocol and effectively like token holder supremacy over the protocol.

So the token holders, like, in theory, should have hard rights and control the protocol, but they are not the best agents to, you know, facilitate a high-quality product. So it's about finding the balance between allowing great developers to ship the best protocol and having hard rights to the token holders if they need them. So we're going to delegate a period, you know, a bunch of the authorities over the protocol to allow us to actively manage them and ship and iterate it, but none that have custody of user funds, for example. But at the same time, giving the token holders the ability to claw all those

authorities back if forever there's a need that the devs stop shipping, for example. So it's about finding the right balance. And we've been kind of like flipping pendulum-like between, you know, decentralized. It's largely this kind of legacy of the binary way we've thought about this. You're either decentralized or you're not. And then people's went, okay, the down will do it. Let's decentralize. Oh, it's a mess.

Let's slip back the other way and slam back to. completely centralized and a few teams have done this. And you mentioned that the kind of slowing things down can be valuable. If you make protocol decisions in public and you're specifying them in public and having delegates review them, you're creating a kind of a pace that means that the decisions can be higher quality. So teams get into mess when they're constantly kind of shipping things behind closed door and they end up getting hacked, for example, because they've had too many authorities on a multi-sig.

If you're doing that in this kind of like slow and steady public iteration process, it's a more secure protocol because of it. So you want the authority, particularly over very serious keys, to be decentralized across many people just for security reasons, if nothing else. Yeah, it's very different. I mean, the one thing that comes to mind is like, It's almost like fan tokens, like for football. They would do these, you know, and token holders could vote on cosmetic minor changes.

They could change the color of the team room. Or they could, you know, they could change the walkout song. Yeah, which is great. I think that's fantastic. That is cool. But it's, you know, is that enough to warrant people to want to eat? invest in the governance coins and then take that stuff seriously. It's almost like you're giving these minor functions like minor functions over to control the Dell. Like I know you spoke

about security and that's a very critical function. But it must be tempting as a software developer to just hand off the baby decisions to the token holders and let them manage it. Yes. You know? This has happened. Do you like jupe Dow played this out perfectly whether you know you could vote on the, you know, what cat they had on the mobile app and things like that, right? And, you know, and they went like max retail with their governance and it consequently was completely chaotic and they've also sort of backed down out of that. So yeah, I mean, if if governance is your primary utility, then you should match what the powers are to what the people want, right? So if they want to vote on, you know, the look and feel of the apps or whatever, then great.

create Dow decisions that do that. But that's why the governance is the kind of base utility. The tokens on top should have additional utility within the ecosystem and ideally capture some of the value through direct value accrual. So if a protocol is making money, then the token should be directly connected to that. And then the governance is there for the people who meaningfully want to steer that. It's because they're long term invested in the protocol.

So you can meaningfully steer the direction of defy protocols if you are interested in doing so. And, you know, but also these tokens should have value within that ecosystem that extend beyond just governance. Otherwise, you will end up like trying to make it valuable through kind of Shan governance proposals, if you like. Let's take a moment to talk about NXO. Nexto delivers a premier digital assets wealth platform designed to help clients build, manage and preserve their wealth. earn interest on your digital assets, access crypto-back credit without selling your holdings, trade with advanced tools, all supported by 24-7 client care. Now back in the US, NXO offers new clients 30 days of exclusive Wealth Club Premier Access,

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As always, investments in blockchain technology involve risk. Terms and conditions apply. Do your own research. Yeah, and maybe we could jump off the idea of strict like token-related governance. And it's like, what was your take on the Arbishop Council decision to claw back these funds related to the Kelpdow attack? Is this good governance? or is it bad governance?

Yeah, it's an interesting one. I've got many thoughts on this, but I think whether it's good or bad is kind of subjective depending on like how you think. We don't know yet. And what's happened is it's kind of destabilized the governance equilibrium around

permissionlessness. So the Security Council on Arbitron was a kind of latent structure. It was therefore in case of security emergencies and what it did was it refrained its purpose if you like to intermediate in hacks whenever it happened now which is you know it's a security incidence but what it has done is intermediate the it's done in a regular state transition which kind of proved that this structure has has almost godlike powers over the ledger both in real time and legacy

transactions, so we can't say it's immutable anymore. In fact, its permissionlessness is dependent on the decision-making of the Security Council. Should they have done it? Yes, probably. And I think that if you can do it, you should do it, especially when, you know, there's actors like Lazarus knocking about. And they kind of absolved their decision-making responsibility to Arbitrum Dow, which is now currently voting on whether to effect transfer the funds to Arvee LLC, who will act as a kind of legal counterparty for it. And that's now like a restraining order, and they will have to wait until the courts basically say you can move those funds somewhere else. Now, the Dow can, if it wants, make everyone whole

today. So we're now at this point of where the deference to various legal structures happens. And It's a very live kind of like what is the future of guidelines as largely how is that going to play out probably. Because I mean the other side of it is Thorchane that, you know, but perhaps, I mean, we don't know how many different parties actually. I mean, they say that they've got rid of the private keys, but they're still, you know, all the data's with power on the network. Yeah. So, and they're basically washing their hands of it. So you're kind of damned if you do and damn it. if you don't, but I think you're right that just having the power to do something and then

not doing something is almost the equivalent of doing something. Yes. Because you have the power, but you're acknowledging that this time I won't activate my power to do it. Yes. And this is the problem with permission blockchains generally. Because any transaction that happened on them effectively is endorsed by, those who have the ability to intermediate it.

This is the case for all permission blockchains, but L2s with security councils and so on. It's now we've moved from a latent to an active structure. It means that effectively anyone could go to the security council now and say, hey, I want this transaction reverters for these reasons. And they now have to answer that question. And so that's why the kind of equilibrium is being destabilized because these decisions are going to happen more going forward.

I would love to be a decentralization maxi-like. That's where I feel most at home in terms of like deep down my personal ideals about what makes all this technology interesting in the first place. And then that's fine. I suppose it's also beneficial to have a broad range of projects. So at a meta level, it's decentralized because you have different implementations of governance structures and all that kind of stuff, which gives a diverse series of outcomes and decision making and all that kind of stuff. And I just find it super interesting. I'm not sure if you're really up to speed with everything that's happening with the Clarity Act and how that bill is trying essentially to define decentralization around these certain triggers that have to do with, you know, little unilay.

lateral control or if one party can action code-based changes, then it's not centralized, or that it's centralized. But do you see that being enough that we have effectively just given those definitions over to a U.S. Congress bill? And then it will be, again, up to regulators to enforce adherence to those definitions as well. Do you see it being realistic that we can actually have a barometer for decentralization and then that be the yardstick for good and bad governance? Is it realistic? Yeah, one of the things I thought would happen this year is that the kind of phrased it as the line of decentralization will be negotiated. I think it's finally got to that time. Part of that was the motivation of clarity, which is starting to

like actually define what decentralized is, largely framing this about like who's in control. And actually, I think their go clarity will put a much greater pressure on this, on Dow's being part of the ecosystem because not only should you have critical decision making decentralized across many parties, but there's also stipulations about how concentrated the control is. So it might do better things for like token distribution for, example. So I'm quite bullish on the selective pressure that clarity is putting on the space, actually. I think it might have, I think this period where people are saying, let's just run everything from a multi-sig that we control is on borrowed time. And eventually people will have to

find credible ways to decentralize it for regulatory reasons. So I think can it be done? Is it going to be correct and perfect, I can already see distances between the reality of how it should be done and what the regulations are stipulating should be done. And there's always going to be this mismatch. And I think the nuance is going to have to come from the industry, largely. I'm a big fan of self-regulatory approaches, particularly around the nuance around what is decentralisation and what's correct and the right way to do it. Because we are stuck in this. there's tension between products performance and product market fit and product velocity against various degrees of decentralization, which can be kind of like radically immutable,

kind of there is no one in control and it's basically impossible to change. But then you throw away all of your potential to be a viable product. So, yeah, we're going to be in this zone of negotiation around the line of decentralization from now on, basically. Yeah, and it's so difficult because, I mean, I would prefer not to care about governance at all. So does everyone. It's like, and it's funny because Bitcoin has done this.

And for how ridiculous the behind the scenes governance of Bitcoin can be and all of the politics and all of the, you know, who funds Blockstream and how much influence Blockstream. has and then and then you know all the hard forks and and everything like that for for for all of that you know and when you talk to people they just they're not interested in bitcoin governance when they when they when they're when they're looking at the value proposition of bitcoin governance does not come into it at all uh but it it seems almost the opposite for for the crypto space uh in that governance does seem to be a big deal.

I mean, Arve copped a lot of flack for what they were trying to do, or like at least that situation. And it called into question, you know, how investable is Arvee in the future? And it's still really playing out in real time.

So we don't really know the effects. But it's like there's, there's not much in the crypto space that has done governance properly to the point that it's not really a concern. So, I just find it difficult to navigate all the way through that. And maybe it's like a function of like, well, we only know how bad governance can be when it blows up.

So it's like the tokens that are just chugging along with the projects that are just trying along. Perhaps that's good governance and it just hasn't come up. That's right. A lot of what drives my work at Gito is just making sure it's not a problem. Right. Like my job is to make sure the down doesn't slow us down too much, but it's high-finding. functioning and largely is just a thing that no one needs to worry about unless they're interested in it. Like good good governance is something that you can like forget about, right?

So yeah, ideally governance is this thing that just credibly decentralizes the protocol and just functions well. Now the where we've kind of got to elsewhere in the space is that like You mentioned Bitcoin. Bitcoin has governance, right? And actually one of the reasons that people find Bitcoin so evident is that it has its governance minimized. Like its governance approach is highly resistant to change. And the reason why Bitcoin is highly resistant to change is because of its governance. So it's actually one of the main value cases for Bitcoin is its governance because it's incredibly resistant to change.

And then you have all of the kind of dramas that happen in governance elsewhere. wearing crypto, largely because they're trying to do more than Bitcoin. So if you're trying to build in more advanced, but if you're trying to do more things, your governance has to move commensurate with what you're trying to do. And largely what we've tried to do is more than the governance is capable of doing. And that's where it's gone wrong. So if you want to do more stuff,

so Brian Gito says this perfectly. It's basically like governance is a muscle, decentralization is a muscle and you have to train it. and if you try and do something that you're not fit to do, you will fail at it. So it's just about being much more cautious and incremental in governance, starting from not doing much and getting more advanced over time, rather than just saying like, okay, the Dow is going to run the ecosystem now, and then it just gets plundered and it all goes wrong. Yeah, because when I see that, I don't mean to pick on uniswap,

but when I see that uniswap is like trying to claw back delegate tokens that, that are out there because it needs to take control of the process. It might have been a case that the Dow had been given too many powers to begin with. Because it just calls into questions. Well, if, you know, who is making those decisions even in the Dow? Like, you've got to look into, oh, it's actually, it could be massively well-funded whales that are making those decisions. And it's just very difficult.

But it does seem to, but at the same time, being able to have an ebb and flow with the power necessary, it almost strengthens the case that that protocol is quite healthy because it understands that when it needs to flexes power and when it doesn't, when it needs to stay fluid

and when it doesn't. So to me, like good governance could be, it could be a flow rather than these strict roles that are in place for all eternity. But is it difficult to have, that malleable philosophy when it comes to building our governance structures. Because it almost feels like, well, if the rules can change in three months, two years,

then why bother participating right now? So this is a topic I'm particularly interested in. I call this meta governance, right, which is the governance around how you change your governance over time. So this allows your rules to be agile and it allows a kind of level of oversight and cyclical improvement that keeps everything kind of relevant and to market and eliminates bad governance. I quite like these kind of subsidiary structures because if one of them is bad, you can just kill them, right? You can just like, and you kind of want to set these things to self-destruct, so they don't

become like a perma committee that just disappears around. So I think there's ways in which that you can have fluid and agile governance that is credibly decentralized. We just haven't put enough thought into what that meta-governance structure looks like and how we build it. So, yeah, I genuinely hope there's going to be a revitalization in the kind of governance conversation, mainly because, yeah, regulations might change that mean we need to find credible arguments for decentralization, but also we're just finding the limits of what happens if you over-centralize. you end up with people on one-of-one multisigs

that automated bridges that get killed instead of having a decentralized key set-up, you end up with two of five multisigs holding the powers to change the entire protocol. So we're just both finding the limits of why you should do it anyway just for kind of like operational security and things like that.

But we're also moving into an area where we're going, okay, we shouldn't be in control of this. If you want permissionlessness, you need to demonstrate that you have zero control over the protocol. And you've mentioned something interesting then when one of the most bullish things I've ever

seen upon on Solana was a vote, a network white vote that went against what everyone wanted. So the kind of Cindy 228, the inflation proposal, the inflation reduction proposal, was killed by the broader, but we, you know, that had the foundation,

and Tully and Mert and all of these people who wanted it to pass. And it didn't. And that for me was like a proof that the network was actually very decentralized across its validator set. So yeah, I think like good governance can be slow and messy, but that it proves that it is a decentralized system and consequently can have the properties of one. Yeah, cool.

Super interesting. I think we'll edit on this last thing because there's a theory out there that we are headed to a world where tokens and equity are the same thing. And a lot of the functions of governance tokens do feel somewhat similar to what are like shares that have voting power were meant to be as well. So like say in 10 years if there are no tokens and there's no equity and we really do have a combination of crypto and tradfi together, and they're the same thing now. What does that do to governance and DAOs if tokens are equity and equity are tokens?

Have we really recreated Tradfai at that point or is there a way to upgrade Tradfai through token voting? It's certainly possible we end up with, you know, the kind of internet capital markets vision is actually just tokenized stocks and then everything just becomes, you know, corporate governance on the blockchain.

which actually would improve, you know, you'd have more direct governance power and you'd have verifiability that your votes were considered and all these sort of things. And do you think you could upgrade standard, you know, corporate governance using a lot of Dow technology. But where I think the kind of Internet Capital Markets vision gets more interesting is that we have a much more diversity at the assets in terms of what they can do. So stocks, for example, yes, you can vote with them, but that's about it, right? And it represents some like proportional ownership, maybe, maybe gives you some dividend rights.

Whereas digital assets in this world can give you access to a protocol in a very nuanced way. They can give you access to different mechanisms that give you different ways of gaining exposure to the protocol in terms of how you want to shape your risk and access to and access and exposure to this crypto economy and all this sort of stuff. So I think I'd be very disappointed if it just ended up with kind of like stocks and neo-corporate governance. I think there's a potential for crypto assets to be extremely interesting and new. And if anything, I think these are securities and this is how they behave,

will allow this kind of new world of crypto asset to flourish because everyone was so worried about being called us security for a long time that we just stayed away from anything that looks like material governance power or anything that looked like material dividend distributions or whatever when in fact what we need to do is liberated to be able to truly explore what's possible with digital assets. To me it's just so frustrating that everything comes down to regulation and I don't want to be tied to regulation.

I want crypto to be completely independent of it because, I mean, it's just, it's such a boring thing. I mean, I'll put regulation below governance. I would prefer to think about governance than regulation. But if it means that we can unlock another, a new way of doing things that we can just shed this worry of being labelled a security and just do things that make sense. and that really do give more power to the token holder and the individual compared to TradFi, then, hey, I'm a regulation fan in that case.

But let's just hope not to be so dry. It's always just like we've waited years for clarity. And we still don't know what it's going to look like at the end of the day. And it's very easy to want to check out. But it is quite important, especially if we're trying to influence, I mean, looking beyond crypto, if we're trying to influence how real world businesses operate through the philosophies of decentralization as championed by the crypto space, then we do need to take that very seriously because there is incredible power to be had by sticking true to the ideals

of decentralization and giving power back to the individual. And perhaps Stratfi will be resistant to those functions as well because, I mean, it is the monolith that it is because it has eroded those freedoms over time. But maybe, I mean, it's a Trojan horse thing all over again, and maybe we will see it happen. You know, I'm hopeful. It could be. And I think, you know, I think the influence of decentralization on Trudfi will be a good thing as it nets out over time. It certainly can't be hurt to be less centralized. And I think we'll have this, you know, open, autonomous play space forever anyway, because it's just what the technology does. But yeah, the average kind of person doesn't want to be

a kind of digital maverick and wants to know that they won't be in trouble if they do things with tokens. So I'm kind of bullish on this, the kind of clarity, if you like, opening up new stuff. Cool. Fantastic. I think we'll leave it there for this particular episode. Thanks so much for joining us again, Nick, and we'll have everyone again soon, I'm sure. Pleasure, man. Thank you very much.