4.4. Governance: Reitio’s Path to Decentralization
Web3 is both a technological and societal revolution — arguably the most consequential innovation in the 21st century since the advent of the Internet.
Traditionally, businesses are formed with the expectation of being governed by a top-down structure for the entirety of its going concern. However, underpinned by the blockchain as the “trustless” layer allowing for a decentralized token-based economy, most web3 protocols are actually designed from the get-go with the eventual goal of being indefinitely governed by its community of tokenholders.
While certainly not all businesses can be made web3-native (ex: manufacturing, etc.), most Internet-native ventures could in fact be reengineered to become web3-native — in the process sorting out the often misaligned incentives between shareholders, the owners of the business, and stakeholders, which are parties that are directly impacted by the business itself (ex: users, employees, suppliers, etc.).
Whilst conventional stock-oriented governance models ostensibly separate a business’ shareholders with its stakeholders (forcing management to choose either to maximize shareholder value or stakeholder interest), token-oriented governance models do not distinguish between shareholders and stakeholders — eliminating the root cause towards this long-running conflict-of-interest that has been evident since the dawn of modern-day corporations and capital markets.
A tokenholder would be a shareholder and a stakeholder of the business at the same time, since tokens represent the sole vehicle to allow for the value accrual, usage, and governance of a web3 protocol in one fell swoop — enabling the paradigm shift from corporate-owned, Internet-native businesses towards community-owned, web3-native protocols.
With that being said, a budding web3 protocol needs to go through certain phases throughout its lifetime before it can be deemed “fit enough” to be fully community-owned. In Reitio’s case, its path to decentralized governance will be split into three phases: “seed”, “sapling”, and “tree”.
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