The blockchain treasury governance dilemma

27 Pages Posted: 24 Aug 2021 Last revised: 20 Jan 2025

See all articles by Darcy W E Allen

Darcy W E Allen

Royal Melbourne Institute of Technolog (RMIT University)

Chris Berg

Royal Melbourne Institute of Technolog (RMIT University)

Aaron M. Lane

Royal Melbourne Institute of Technolog (RMIT University)

Date Written: October 24, 2024

Abstract

Blockchain treasuries are pools of cryptocurrency earmarked for funding goods and services within a blockchain ecosystem, such as protocol upgrades. Blockchain participants, such as users and developers, face a trust problem in ensuring that the treasury is robust to opportunism, such as theft or misappropriation of the assets. Treasury governance structures, such as committees or stakeholder voting, seek to create trust in treasury functions. In this paper we use new comparative economics to examine how treasury governance mechanisms minimize the costs of dictatorship and disorder, thereby bolstering trust. We interpret case studies of innovative treasury governance within this Institutional Possibilities Frontier (IPF) framework, showing that the costs shift throughout the lifecycle of a blockchain community, and those costs are often revealed or learned through governance crises. These changes lead ecosystem participants to choose and innovate on treasury governance.

Keywords: Blockchain Treasury, Blockchain Foundations, New Comparative Economics, Institutional Possibility Frontier, Private Governance

Suggested Citation

Allen, Darcy W E and Berg, Chris and Lane, Aaron M., The blockchain treasury governance dilemma (October 24, 2024). Available at SSRN: https://ssrn.com/abstract=3891976 or http://dx.doi.org/10.2139/ssrn.3891976

Darcy W E Allen (Contact Author)

Royal Melbourne Institute of Technolog (RMIT University) ( email )

Melbourne, 3000
Australia

Chris Berg

Royal Melbourne Institute of Technolog (RMIT University) ( email )

124 La Trobe Street
Melbourne, 3000
Australia

Aaron M. Lane

Royal Melbourne Institute of Technolog (RMIT University) ( email )

124 La Trobe Street
Melbourne, 3000
Australia

HOME PAGE: http://https://www.rmit.edu.au/contact/staff-contacts/academic-staff/l/lane-dr-aaron

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