Governance – the biggest challenge of Web 3.0 at ‘Berlin Blockchain Week 2024: Governance, subjective rules and RWAs 

Critical Web 3.0 Governance Flaws Exposed 

Berlin, Germany, May 30, 2024, Berlin Blockchain Week  

The fragility of Web3’s governance foundations was on full display at a recent event hosted by Q Blockchain and Kleros, with more than 160 guests including governance experts, crypto project founds and representatives from Grand City Properties, T-Systems and Consensys, and more. Experts laid bare how today’s flawed governance models are enabling exploits and posing an existential threat to the ecosystem. 

The Accountability Crisis 

A lack of true accountability in decentralized protocols is opening the door for bad actors, as CoinDesk’s Amitoj Singh bluntly put it: “Governance flaws cause exploits.” From majority token holders forcing through malicious proposals, to governance vulnerabilities leading to catastrophic hacks when bridging assets across chains, the examples are piling up. 

Amitoj Singh – Journalist at Coindesk 

The DAO Paradox – Real challenge of Web 3.0

At the core, today’s decentralized autonomous organizations (DAOs) were called out as lacking maturity. As founder of RnDAO and former head of governance at Aragon Daniel Ospina stated, governance is often “just voting and a treasury.” Without effective dispute resolution, DAOs either devolve into partisan arguments or unilateral decisions by foundations. 

Daniel Ospina – Instigator of RnDAO 

The Governance Knowledge Gap

Consensys’ Alexander Greinacher identified a “knowledge gap” around governance that is severely hindering Web3 adoption. From developers struggling with governance code to enterprises being spooked by risks, this gap is proving an existential roadblock, which is a problem because in his opinion ‘governance is the basis of everything’. 

Alexander Greinacher – Director Sales & Go-to-Market at Consensys 

Potential Solutions  

While the governance crisis was made clear, potential solutions were also highlighted. Q Protocol is tackling a core challenge of decentralized governance – enabling credible resolution and enforcement for subjective rules and real-world contexts that code alone cannot handle. By leveraging internationally recognized arbitration frameworks like the ICC‘s, Q Protocol aims to bridge the gap between blockchain code and robust governance processes.  

As Samuel Delesque of Closer stated: “Q’s dispute resolution mechanism will be important for decentralized arbitration of real-world contexts.”  

Samuel Delesque – Co-Founder of Closer 

Kleros aims to make DAOs safer and establish accountability to reduce challenges in web3. It is now combining their dispute resolution procedure with Q’s capabilities to enforce rules. Kleros has implemented a so called ‘constitutional check’ to ensure that governance aligns with core principles and agreed-upon rules, thus providing a robust framework for checks and balances within DAOs.

Alexandre Perez – DAO Lead at Kleros 

As Elk Finance‘s Shylo Cliffe warned: ‘We need governance to be secure, robust and functional across chains.’ The onus is on the community to innovate and uphold credible governance standards. 

Shylo ’LtSnakePlissken’, Simon ’Clickbait’ – Elk Finance 

Ronald Kogens of MME called the event ‘the perfect opportunity to talk about the important things and connect with other great minds.’ He emphasized that ‘code is law only works on-chain’ and doesn’t allow complex use cases. 

Martin Schmidt Q Blockchain, Ronald Kogens  – MME Legal, Clément Lesaege Kleros, Paolo Maria Gangi LexDAO 

The Path Forward  

The event conveyed that robust decentralized governance is urgently needed to resolve subjective policies and contexts in a tamper-resistant way and other challenges in web3. Failure to do so risks leaving Web3’s full potential unrealized. 

Despite the major challenges that lie ahead, the atmosphere was positive and stimulated by inspired conversations. The community networked, discussed, enjoyed food and drinks late into the night and celebrated with DJ Marvel Gold. 

The future lies in credible decentralized governance and dispute resolution of real-world contexts. A special thanks to the event partners, speakers and panelists!