The killer app of web3 is governance experimentation

Last night, I joined a new investment fund.  The fund was conceived on Saturday, launched Monday and now has hundreds of collaborators. You can join too here.

I have no idea how Hyperscale will develop.  Or, if it can efficiently allocate resources to productive uses.  But it is clear that the cost to create a new organization has dramatically reduced.  With lower costs, experimentation will increase.  

Currently, the dominant form for businesses is a C-Corp. The dominant form for investment funds is a partnership with General Partners managing investments on behalf of Limited Partners (or LLCs with similar structure).  Both forms have a market share that would be considered monopolistic in any other industry.  

The legal structures were designed when communication costs were high. Information asymmetry was assumed. Corporate forms needed to protect those with less information from those with more information through a series of rights and responsibilities put on the managers.  What if that constraint is relaxed?

We are seeing experimentation with DAOs, as well as other on chain and off chain governance structures.  It is too early to tell what structures will endure. And what governance structures will best match the needs and goals of specific projects.  But, we can conclude that collections of individuals today who want to work together toward a collective goal have more options to chose from in organizing themselves.

If you believe governance matters, the Cambrian explosion of new forms alone should make you optimistic not only about web3, but also about economic growth and society collaboration in general.   We have increased the number of possible tools for humans to collaborate at scale.

More reading on this topic here:

• Chris Dixon and Steven Johnson
• Bankless interview with Vitalik Buterin (and Vitalik's piece on this)
• DAOs: a new organizational and governance paradigm by Louis Grx
• Aaron Wright on Twitter for legal analysis on DAOs