Progressive Decentralization

Progressive decentralization describes the process by which many Web3 founding teams start token network projects and slowly transition control to its community of token holders[78]. Centralized management is optimal in early-stage projects as product-market-fit is pursued, and the founding team provides clarity in vision, speed in execution and the ability to make important course corrections. As token projects grow and network effects can be harnessed both by technology aggregators and the community at large, decentralization becomes optimal, managed under a DAO (Decentralized Autonomous Organization). A playbook[79] on progressive Technical, Economic and Legal decentralization[80] suggests the best course involves moving towards decentralization as the project succeeds in achieving “product/market fit, financial sustainability, a participatory community and regulatory compliance - in that order.” The transition of control will occur as the dependence on the product and early development team is reduced and ultimately eliminated, as financial independence is established, the distribution of $CARROT rewards are automated completely, and when the community is large and mature enough to manage and protect the ecosystem through a robust and battle-tested governance design. $CARROT systems: technology (see Product Roadmap), economics (see Tokenomics) and legal (see allocation) is designed such that “open decentralization”[81] can be achieved in a few short years.

78. A16z - Principles & Models of Web3 Decentralization, p.1

79. A16z - Progressive Decentralization: A playbook for Building Crypto Applications by Jesse Walden

80. A16z - Principles & Models of Web3 Decentralization, p.2

81. A16z - Principles & Models of Web3 Decentralization, p.15