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The Web3 Decentralization Debate Is Focused on the Wrong Question

  • 13 days ago

WEB3 ADVOCATES PROMISE decentralization on an unprecedented scale. Excessive centralization can stymie coordination and erode freedom, democracy, and economic dynamism—decentralization is supposed to be the remedy. But the term on its own is too vague to be a coherent end goal. Getting the job done takes the right kind of decentralization, and we worry that Web3 is thus far heading down the wrong track.

In particular, we worry about the focus on degree, rather than type, of decentralization. Focusing on degree—whether we want more or less decentralization—can lead Web3 advocates to mischaracterize both the reality of existing centralization, as well as the possibility of pure decentralization. On the one hand, existing “centralized” systems are not nearly as centralized as Web3 advocates commonly describe. “Legacy” banks delegate many activities to local branches, and even central banks are often consortia. Architecturally, “centralized” clouds are rarely so centralized in practice; they are usually scattered around a range of geographies and train large machine-learning models in a distributed fashion.

On the other hand, many Web3 critics have pointed out the extreme inefficiencies that accompany proposed decentralized architectures, as well as the inevitable re-emergence of “centers” in Web3 (NFT platforms, currency exchanges, wallet providers). In addition, there are important limits and trade-offs involved in broadly aiming at greater decentralization. Narrow technical decentralization, for instance, faces contradictions between resisting censorship and embedding values that often results in either worse functionality or some centralized decision-making in the end, as shown by content moderation on decentralized social networks.

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