[en] Bitcoin and Ethereum are frequently promoted as decentralized, but developers and academics question their actual decentralization. This motivates further experiments with public permissionless blockchains to achieve decentralization along technical, economic, and political lines. The distribution of tokenized voting rights aims for political decentralization. Tokenized voting rights achieved notoriety within the nascent field of decentralized finance (DeFi) in 2020. As an alternative to centralized crypto-asset exchanges and lending platforms (owned by companies like Coinbase and Celsius), DeFi developers typically create non-custodial projects that are not majority-owned or managed by legal entities. Holders of tokenized voting rights can instead govern DeFi projects. To scrutinize DeFi’s distributed governance strategies, we conducted a multiple-case study of non-custodial, Ethereum-based DeFi projects: Uniswap, Maker, SushiSwap, Yearn Finance, and UMA. Our findings are novel and surprising: quantitative evaluations of DeFi’s distributed governance strategies reveal a failure to achieve political decentralization.
Research center :
- Interdisciplinary Centre for Security, Reliability and Trust (SnT) > Other
Disciplines :
Library & information sciences Law, criminology & political science: Multidisciplinary, general & others Engineering, computing & technology: Multidisciplinary, general & others
Author, co-author :
Barbereau, Tom Josua ; University of Luxembourg > Interdisciplinary Centre for Security, Reliability and Trust (SNT) > FINATRAX
Smethurst, Reilly ; University of Luxembourg > Interdisciplinary Centre for Security, Reliability and Trust (SNT) > FINATRAX
Papageorgiou, Orestis ; University of Luxembourg > Interdisciplinary Centre for Security, Reliability and Trust (SNT) > FINATRAX
Rieger, Alexander ; University of Luxembourg > Interdisciplinary Centre for Security, Reliability and Trust (SNT) > FINATRAX
Fridgen, Gilbert ; University of Luxembourg > Interdisciplinary Centre for Security, Reliability and Trust (SNT) > FINATRAX
External co-authors :
no
Language :
English
Title :
DeFi, Not So Decentralized: The Measured Distribution of Voting Rights
Publication date :
January 2022
Event name :
55th Hawaii International Conference on System Sciences
Event organizer :
University of Hawaii
Event place :
Maui, Hawaii, United States
Event date :
from 03-01-22 to 07-01-22
Audience :
International
Main work title :
Proceedings of the Hawaii International Conference on System Sciences 2022
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