Coordination Institutions Should Strive for Simplicity
Thank you for sharing these great resources. In my research, I’ve been diving deeper into each piece. I wanted to share some proposed solutions regarding, Notes on Blockchain Governance , specifically suggested answers to the two key questions for L2 governance.
1. What should Layer 2 be?
Layer 2 should be a mechanism for decentralization, creating opportunity, and inventing incentive systems for a more equitable economy. Inventing new incentive systems that create opportunity to earn economic income through providing products and services is critical. Layer 2 governance should also be a relatively fast, flexible, and open source protocol.
2. What coordination institutions should people be encouraged to care about?
People should be encouraged to care about coordination institutions creating opportunity for decentralization, innovation, and entrepreneurship. Far too often Layer 2 projects focus on traditional financing through venture capital investment. As a result, many Layer 2 projects fail to focus on solving real problems, earning sustainable revenue, and inventing useful goods and services. This creates extreme inefficiencies and economic inequalities in the market by rewarding pitch deck presenters, greedy actions, and technical stagnation. At the same time, the centralized institution of venture capital too often punishes demand driven businesses, producing technical work product, and the calculated risk taking necessary to innovate.
Therefore, one keystone for coordination institutions and decentralization more generally is scaling blockchain use cases and inventing solutions to centralized problems. Voting is one of these use cases because voting with blockchain technology solves problems associated with the centralized counterpart. For example, blockchain voting systems are usually more secure than centralized voting systems, which most often are vulnerable to corruption, slow in processing, and unable to produce verifiable results. [1, 2] This is particularly true in the context of open source software, an inherent public good promoting progress in voting transparency, security, and validation.
Compliance is another keystone for coordination institutions because traditional institutions distort rules, regulations, and laws to their benefit and according to incentive structures for individual decision making.  Most think blockchain regulations are ambiguous. But for traditional institutions like banks and government agencies, ambiguity is often leveraged as flexibility because institutional oversight is de minims. Still compliance, which is traditionally an important governance process  is almost always forgotten or ignored in discussions of decentralized governance. This is bad for at least two reasons: 1) right now trust in blockchain technologies, systems, and businesses is relatively low; and 2) algorithmic automation for compliance is a problem where blockchain technologies stand to add real value by supporting solutions using natural language processing, software infrastructure, and decision functions.
A final keystone for coordination institutions is financial opportunity measured by incentives to earn through active network participation and producing decentralized work product. One place where centralized institutions almost always fall short is providing useful financial services to small businesses, gig workers, and entrepreneurs. A main reason is because centralized and traditional institutions are incentivized to stop technical progress and issue monetary debt to maintain their competitive advantage in global markets, which is based almost purely on cash capital alone. Thus, for blockchain to succeed at scale, coordination institutions must be able to properly support small businesses, entrepreneurs, and open source developers by creating and fostering opportunities to earn income.
Perhaps the Principle of Parismony will serve coordination institutions well.  Coordination institutions need a way to cut through complexity and convolution in what they support. This requires a keen ability to spot problems, invent solutions, and execute on implementation. In the context of blockchain technology, complicated code commonly confuses core value alignment in open source development. Similarly, corporate conglomerates confound grossly guided groups spiraling in entropic diffusion and spawning extreme economic inequalities. Still, the simplest explanation is usually right, simplex sigillum veri. As such, simplicity should be a measurable metric of success for coordination institutions, decentralized projects, and open source software development.
 Vitalik Buterin, Notes on Blockchain Governance (2017).
 U.S. Department of Justice, Report on The Investigation into Russian Interference in the 2016 Presidential Election, Vol. I (2019).
 Congressional Research Service, Artificial Intelligence and National Security (2019).
 Mancur Olson, The Logic of Collective Action (1971).
 Veronica Root, The Compliance Process, 94 IND. L.J. 203 (2019).
 Oxford Reference, Principle of Parsimony (2022).