The Blockchain Treasury Governance Dilemma

ABSTRACT Blockchain treasuries are pools of cryptocurrency earmarked for funding goods and services within a blockchain ecosystem, such as protocol upgrades. Blockchain participants, such as users and developers, face a trust problem in ensuring that the treasury is robust to opportunism, such as theft or misappropriation of the assets. Treasury governance structures, such as committees or stakeholder voting, seek to create trust in treasury functions. In this paper, we use new comparative economics to examine how treasury governance mechanisms minimize the costs of dictatorship and disorder, thereby bolstering trust. We interpret case studies of innovative treasury governance within this Institutional Possibilities Frontier (IPF) framework, showing that the costs shift throughout the lifecycle of a blockchain community, and those costs are often revealed or learned through governance crises. These changes lead ecosystem participants to choose and innovate on treasury governance.