Governance – sounds simple, doesn’t it? It’s the process through which we establish and understand the operating procedures of a particular ecosystem. Governance sets the rules and norms we agree to when operating in a specific ecosystem. Digital Governance can range from totally informal and essentially non-existent to a massively complex, global community.
“As a technical founder of multiple startups, I used to think that tech could solve 90-95% of problems. I am now completely upside down in that tech can only solve 5-10% of problems, and we need other things to make the real difference that we want to make.” – Darrell O’Donnell.
Those “other things” are the softer changes that need to be made to drive actual adoption.
Digital Governance is a huge part of that in many systems, and how it applies to you and your business will differ. There will be ecosystems where you must play an influential role and others where you just need to be a member. (NOTE: We don’t believe you can control an ecosystem. As a result, the best you can do is “influence what you need.”)
The likely answer to establishing the governance you need is a digital Governance Framework (also called a “Trust Framework”). Interoperable digital trust infrastructure requires more than just technology. It requires that the members of a digital trust ecosystem agree on the business, legal, and social rules and policies they will follow to achieve their trust objectives. This collection of regulations and policies in decentralized identity infrastructure is called a governance framework. Depending on your ecosystem, you may need very little or a lot to establish the digital governance you need.
Two Vastly Different Ends of the Digital Governance Continuum
To illustrate and get an idea about governance and its need and scope, let’s look at two wildly different examples: Credit Card Networks and DAOs.
Big credit card networks like American Express, Visa, and MasterCard may look straightforward and feel like technology companies. They aren’t tech companies. They are certainly tech-heavy, but under the hood, they are a system of governance. Sure there is loads of deep tech, but the reason that technology exists is to support the rules that ensure that when a payment is made, every party involved understands what will happen and who gets paid and when – and what protections the consumer has. These are heavyweights in the governance realm, and they are understood pretty well by those that play in the ecosystem. These rules apply in a country and at the global level. You know you can go somewhere, use your Amex, and it should work where they accept Amex. The governance system put in place with various rules, regulations, contracts, and more creates a seemingly simple network.
On the other end, let’s consider a simple DAO that allows holders of a governance token to vote on something (e.g. “should the network adopt change X?”). We may need nothing more than the smart contract that puts voting in place – if you hold N tokens, you get N votes. A change is proposed, a vote happens, and the change is made (or not made) according to the results. As a result, there isn’t really any need for heavy governance.
Depending on your ecosystem(s), you may need something between the two. Therefore, our recommendation is to start on the lighter side.