The Power Structure of Cryptocurrency Projects: Vitalik Discusses the Importance of Decentralization Design

According to PANews reports, an article titled “Balance of Power” published by Ethereum co-founder Vitalik Buterin on December 31st has attracted industry attention. Buterin argues that the sustainable development of cryptocurrency projects requires the optimization of power structures as an essential challenge.

Decentralization Strategies as Equally Important as Business Models

As a common issue faced by many crypto projects, Buterin points out a significant misalignment in the development phase. While most project teams focus on building their business models, they tend to neglect the equally important “decentralization strategy.”

While a business model is certainly essential for the continuous securing of operational resources, Buterin warns that without a well-designed decentralization, power within the project can become overly concentrated, leading to monopolistic control by a single entity. Such concentration of power poses a serious risk, making the entire system vulnerable and significantly reducing resilience against unforeseen events.

Learning from English and Open Protocols for Natural Power Distribution

Buterin presents examples of natural power decentralization, such as language systems and the structure of open protocols. Widely used languages like English make it practically impossible for a single individual or organization to hold monopolistic control. Similarly, internet foundational protocols like TCP, IP, and HTTP are designed without centralized control points, thereby eliminating control by a single entity.

These examples suggest that power decentralization can naturally occur. However, not all projects possess such conditions.

Achieving Deliberate Decentralization through System Design

In many crypto projects, power decentralization does not happen naturally. Instead, strategic system design and architectural innovation by project teams are necessary. Buterin emphasizes that eliminating the drawbacks of centralization while achieving flexibility and efficiency is a key challenge for the future of the crypto industry.

He calls for existing projects to thoroughly review their power structures. It is not enough to focus solely on business efficiency; decentralization should be regarded as equally important as management goals. This shift in perspective is believed to lead to the development of a more robust and sustainable ecosystem.