Governance as a Source of Value
Sam McCarthy on how the DeFi blueprint aligns market incentives with societal values
We’re very excited to feature another guest contributor post on Boardroom’s Mirror page.
In this latest post, Sam McCarthy - who writes at Cryptociety on Substack - takes a first-principles approach to discuss the various ways to think about how governance tokens have value.
Governance as a Source of Value by Sam McCarthy
In this essay, Sam focuses on the sources of value of “pure” governance tokens, i.e. those that don’t have claims to cash flows and simply carry rights to partake in protocol governance.
Borrowing from economist/anthropologist David Graeber’s framework for interpreting value outline in his book “Toward an Anthropological Theory of Value,” Sam evaluates three different sources of cryptoasset value: economic, sociological, and linguistic.
A unifying theory of value, derived from this framework, according to Sam, is that “actions and objects become meaningful (or valuable) to humans by being incorporated into a social system.” Sam explains that governance tokens for open source, forkable crypto protocols fit well into this framework since their value inherently relies on social consensus.
Finally, Sam proposes “governance power as a new fundamental metric in token valuation that can be measured by a ‘governance premium’ assigned to a token's price” and makes the case that “DeFi and the rest of the cryptoeconomy offer a promising alternative” to current economic systems.
Read Sam’s full post on the Boardroom Mirror page:
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