A story has taken root in the domain of blockchain technology, a story that advocates the gradual transition from centralized control to a decentralized future. Yet this narrative, often presented by those in power, ignores a fundamental truth about power: Once seized, it is rarely surrendered without a fight.
This belief that a centralized beginning can smoothly transition to a decentralized ethos is more myth than reality, akin to convincing a child to give up his firm grip on a coveted piece of candy. The intention is not to label venture capitalists or early stakeholders as adversaries; it is to argue for balance, for fairness that underlies the foundation of blockchain.
I often hear, “We will start out centralized, and later we will become more decentralized.” But I believe this is nonsense!
One of the hardest things to give up is power. This idea is vividly illustrated by the French Revolution, a historical event that epitomizes the struggle to redistribute power from an entrenched monarchy to a democratic structure of government.
Despite the promise of freedom, equality and fraternity, the revolution faced enormous resistance from those unwilling to relinquish control, leading to a turbulent period of conflict and transformation. This historical episode serves as a poignant reminder that once power is gained, giving it up is a much greater challenge than many expect.
The illusion of control
As blockchain ventures flourish, the grip of those in control continues to expand, with early investors and builders basking in the success their influence has brought.
Conversely, in tumultuous times, these same figures embark on reassurance campaigns, painting over cracks as they strategically plan their exit. This stark duality reveals a profound flaw in the prevailing mantra of “centralize now, decentralize later,” which significantly underestimates the seductive appeal of power and the inherent challenges associated with giving it up once it is established.
The promise of distributed authority is at the heart of the blockchain revolution. Reimagining governance where innovation not only serves the circulation of capital, but also empowers and amplifies a multitude of voices (not just those traditionally heard in the corridors of prosperity). Yet a disturbing reality overshadows this ideal: a staggering concentration of more than 80% of blockchain assets in the hands of just 1% of wallets.
Regardless of whether these assets are part of projects that aim to fully decentralize or not, the fact is that early stakeholders and VCs often hold the biggest piece of the pie for new blockchains simply because they get in first, when it most risky.
This imbalance transcends mere issues of fairness and affects the viability of blockchains as engines of innovation and inclusivity.
It is a travesty that the vast majority of value creation does not come from this 1%, underscoring a crucial gap. Those who contribute the most to the ecosystem often have the least say in its direction and the smallest stake in its success. The early venture capital funds that owned all the tokens do create an impact with their initial investments, but that is usually where their participation ends. And because the protocol’s governance is based on token ownership, the new builders don’t have the weight to make major decisions by the major token holders.
Read more in our opinion section: The worst form of decentralization is no decentralization at all
This major discrepancy is not only unfair; it is fundamentally counterproductive and undermines the incentive for innovators, developers and community members to put their energy and creativity into the ecosystem.
By sidelining the very individuals who are the lifeblood of innovation, blockchain ecosystems risk stagnating as the centralized accumulation of benefits stifles the diverse input and collaboration essential for breakthroughs and resilience.
Such a structure threatens long-term sustainability and the incentive for valuable contributors to remain involved and invest in these projects. The long-term viability of blockchain technology depends on its ability to foster a truly inclusive environment in which contributions are appropriately recognized and rewarded, ensuring that all participants have a stake in the success of the ecosystem.
It’s time to start over
Where do we go from here?
I believe that many of the first generation blockchains, the foundational layers that have been the foundation of the industry, have veered too far off course. Their structures have been consolidated around centralization to a point where a return to true decentralization may no longer be feasible.
This does not mean that they are doomed to failure; far from it. The potential of blockchain technology is enormous, its future is inherently multichain and promises a landscape rich in diverse and interconnected networks.
However, if we want to fully realize this potential, we must start again. This statement may seem daunting, but given the broader timeline of technological evolution, we are still in the nascent stages of blockchain development.
The beauty of this space is its foundation in open source principles. Almost all blockchain technologies are open to research, adaptation and reuse. This openness paves the way for the creation of new projects – that is, the restart of existing chains, each of which has its own mission and fosters a unique culture.
Taking this path is not just about technological innovation; it’s about reshaping the ethos that drives blockchain development. By initiating new projects with decentralization as a core principle, we have the opportunity to correct course.
This approach not only replicates what came before, but builds on it, learning from past missteps to create blockchains that are truly of the people, by the people, and for the people.
To visualize the potential paths of blockchain, we need to consider two atomic reactions: fusion and fission. A blockchain powered by a diverse, invested community is akin to a fusion reactor. It is efficient, sustainable and produces a continuous outflow of energy. This model represents a decentralized ecosystem in which power and rewards are distributed evenly, fostering innovation and participation from all stakeholders. The result is a robust and vibrant network, capable of long-term growth and adaptation.
In contrast, a network dominated by a few reflects the principles of a fission bomb: initially powerful, but ultimately leading to destruction. This reflects a centralized blockchain ecosystem, where concentrated power leads to quick profits that are not sustainable over time. Such a structure can hinder innovation and lead to a fragile system on the verge of collapse.
This analogy underlines the crucial choice that blockchain makes between sustainable growth and short-term profits, and emphasizes the need for a decentralized approach to ensure the technology’s long-term viability and success.
Decentralization as a starting point, not just a distant dream
Decentralization should be the cornerstone, not just an aspiration, of blockchain’s journey. It’s about democratizing power, nurturing a community where everyone’s voice matters and every contribution is valued from the start.
At this crucial moment, blockchain’s trajectory depends on our decision to anchor it in decentralization from the very beginning. By prioritizing decentralization as our fundamental principle, we are charting a course toward a future where blockchain serves as the foundation for equitable growth and democratic engagement.
Let’s seize this opportunity to redefine the landscape and ensure that blockchain remains a tool to empower the many, not just the few. By doing this, we not only realize the full potential of blockchain technology, but also contribute to the creation of a fairer, more inclusive world.
This is not just the path to technological innovation, but a step towards a more equitable and collaborative ecosystem.
We are still early.
Chris Swenor is a seasoned entrepreneur and blockchain pioneer with a twenty-year career that started as a self-taught programmer at the age of 13. He quickly transitioned from corporate roles to startups, leading several to successful acquisitions. Chris started looking into blockchain and cryptocurrency in 2013 and in 2019 founded Reach, a platform that has since raised over $13 million in funding and attracted over 8,000 developers. In recent years, Chris founded Humble, a decentralized exchange on Algorand, and Alloy, a blockchain gaming platform acquired in 2023. He is currently working on Voi Network, a layer 1 blockchain that provides the community with user-centric governance and economics.