Hi everyone,
I think the Security Council’s swift action was very commendable. Well done to everyone involved.
And now I keep seeing the same responses on X: people saying Arbitrum isn’t decentralized, others saying those critics don’t know what decentralization even is, others insisting that Arbitrum did the right thing (which is true) - and then the whole thing keeps going. This whole centralization -vs - decentralization debate seems to have been going on for years.
As far as I can see, Arbitrum already appears to have realised that centralization vs decentralization is the wrong frame because, in practice, it has moved towards layered authority.
So that looks like broad participation most of the time, and more concentrated authority when the chips are down and speed and coordination are critical.
But this isn’t clearly defined yet. Just saying we’re part centralized and part decentralized doesn’t cut it - critics can poke holes in it, supporters are still left wondering where the limits are, and regulators are likely to find that problematic.
So I’d suggest making this structure clearer, so that when this happens again (and it will) people know what to expect. I think Arbitrum has the opportunity to lead the way for the entire DAO movement.
I tried explaining this more fully here: https://medium.com/@onlyformholds_41324/centralization-decentralization-and-daos-912c853ade10
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Oliver raises a valid point, and I think this is exactly the kind of structural clarity Arbitrum needs to document.
The online debate is growing different reactions, different angles but one thing is clear to me: this was an emergency, and the right call was made.
When things move as fast as they did, waiting for community consensus isn’t a luxury you have. A governance proposal takes time to draft, time to discuss, time to reach quorum. In a crisis, that delay can be catastrophic for the protocol and everyone who depends on it.
This is precisely why layered authority exists and why it should exist. Emergency decisions aren’t a betrayal of decentralization. They are a pragmatic feature of any governance system that wants to survive in the real world.
The Security Council acted in the best interest of the project. That’s not centralization overreach that’s the system working as intended under pressure.
What Oliver is right about, though, is that this structure needs to be formally defined and communicated, so the next time this happens, the community, critics, and regulators all understand the framework not just those deep in Arbitrum governance.
The debate around centralization vs decentralization will keep going in circles until Arbitrum leads with clarity. This is that opportunity. @OliverBuilds
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Thanks for the feedback. It seems as if the current approach of implicit control, which is what most DAOs are doing, is probably going to be workable for the next two years or so. The regulators are busy with centralized exchanges, stable coins, custodial services, etc. DAOs are a lot of work, more complex, and MiCA doesnt really address DAOs. But after two years (maybe sooner), precedent cases will emerge, and AML/consumer protection will tighten up, so that’s when the issue will be forced one way or another. The options I see are max decentralization, which means being unable to respond to exploits like Kelp. No emergency powers and no intervention capabilities. That would be unacceptable for any system with value at stake. No DAO can realistically choose that. Then the second option is continuing in this current path, which means more legitimacy arguments and looking vague under regulatory scrutiny. Then there’s the third option where you have explicit layered governance. The upsides are that it’s internally coherent, easier to justify decisions, mroe credible to sophisticated observers. Downside is that it makes control structures clearer. I suppose if there’s no precise legal line forcing a redesign and enforement hasn’t yet started with DAOs, the temptation must be to just wait and see. But once a DAO shows clear intervention capability (like what just happened with Kelp) or has identifiable contributors or councils, like the security council, then doesn’t it become a much cleaner enforcement target? From what I’ve seen in crypto over the past 11 years, things work until they don’t and when they don’t, it usually stops working abruptly. So I think it’s the right thing to do raise this now and hopefully there’s still some time to get this addressed.
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