3 Phases of Decentralization

It is difficult to pinpoint the moment that “sufficient decentralization”[85] will be achieved by the $CARROT network as it moves through the process of progresssive decentralization. However, we can break this process down into 3 main phases, explained by the diagram and list below:

Figure 47: The 3 Phases of Progressive Decentralization for the $CARROT network

1. Phase 1: Carrot Fndn led development in partnerships with early ecosystem contributors, or External Service Providers;

2. Phase 2: Set up of Carrot Protocol Improvement Proposals mechanism at the Carrot DAO for CIPs to be executed by the Carrot Fndn and External Service Providers;

3. Phase 3: Complete transfer of the Board of Stewards and infrastructure management from the Carrot Fndn to the Carrot DAO. Further decentralization (away from the Board), will continue as Governance and Infrastructure are moved to the community via CIPs and executed via smart contracts.

While progressive decentralization addresses the process of transferring power from a centralized team to a open community, a key factor determining the speed at which this can occur depends on network security and how well risk is managed for its members, including in discouraging the attention of bad-actors and avoiding governance attacks, as has been witnessed in many decentralized projects. Assessing ecosystem vulnerability will also be a consistent focus of the “The Board” as it moves toward decentralization.[86]

85. Variant Fund - Sufficient Decentralization: A Playbook for web3 Builders and Lawyers by Marc Boiron, Chief Legal Officer at dYdX Trading

86. A16z - DAO governance attacks, and how to avoid them