Web3 Governance - Cryptographic vs Organizational Trustbuilding

I am interested in how the shift to web3 will change organizational leadership models (here, here and here for my previous posts).  So, my friend Ross Davisson reached out with a great point about how the market may evolve, recreated in my language below. Full credit to Ross for the insight.

Crypto was developed by privacy focused technologists. The early protocols -  Bitcoin and Ethereum notably - place extreme emphasis on security.  By design, the protocols were built to allow for exchange in zero-trust environments. In trade-offs between efficiency, for example the number of transactions per second, and security, these early innovators chose security.

Today, we are seeing new web3 protocols find a different balance point between security and efficiency.  The Bitcoin Lightening network (a layer 2 protocol) and Solana  (layer 1) are examples.  Developers, token speculators and customers(?) are showing a willingness to concede some level of security protection for the benefits of quicker transactions.   And, of course, the most mainstream entity in the crypto universe is Coinbase, a publicly traded company with complete centralization over the digital assets it holds for users.

Regulators are also entering the market, and will increase their oversight in the months and years ahead.  As web3 moves mainstream, regulation will come in some form, likely supporting platform centralization, or at least identity certification standards such as Know Your Customer (KYC).

Together, customer preferences and increasing regulations will lead to new political forces shaping the industry.  Extreme decentralization will lose share to models that balance security and performance.

But, protocols and the organizations/collectives behind them will still need to gain trust. If trust can't been conferred solely through cryptographic decentralization, then more traditional ways of building trust will step in -  service quality, brand, credentials, testimonials, etc.   Anonymity in this world will be a powerful limiter to trust.

It follows that there is space for new protocols and leaders to find a new balance point between cryptographic and organizational trust, or as Ross says "Whereas today's designs try to allow interactions occur with "zero trust", in the future I think carefully built levels of trust will supplant the need for total zero trust."

The opportunity is to build those organizations today.  They could be DAOs, they could be foundations, or traditional companies. I suspect they are not anonymous. (As Andy Weisman has long said 'real names be proof.')

It also may be the case that there is a continuous spectrum between cryptographically secured trust and organizationally derived trust, and the next few decades will see markets wavering between the two, depending both on current market sentiment and specific use cases.

The takeaway is that the composition of the market today in terms of crypotographically secured trust vs organizationally derived trust is not likely to be the same as it is in five, ten years.  As the market matures, there is ample space for innovators who want to build in web3 by putting their name out there, creating value, and building legitimacy based on long-standing trust building practices.  

In other words, web3  is even more open than I had considered.