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Community-Owned Crypto: The Future is in Treasury Governance

Community-Owned Crypto: The Future is in Treasury Governance

Hey there, Crypto Curious! John here with Lila!

You know, for something that’s supposed to be about decentralization and taking power away from big corporations, sometimes crypto can feel a bit… well, familiar. Big promises, but who really benefits?

The Elephant in the Room: “Value Capture”

Our article today, from the smart folks at Astar Foundation, kicks off by talking about a big issue in the world of Web3, which is basically the next big step for the internet built on blockchain technology. They say Web3 has a problem with “value capture.”

Lila: Hold on, John! “Value capture”? That sounds super technical. What does it even mean?

John: Great question, Lila! Think of it like this: Imagine you’re building a fantastic treehouse in your backyard. You put in all the effort, invite all your friends to play, and everyone loves it. “Value capture” would be if, after all that, someone else (maybe a friend who just showed up for the fun part) ended up owning the treehouse, collecting rent from everyone who wanted to play, and keeping all the benefits, even though you and the other builders did all the work!

In the crypto world, “value capture” means that even though projects might have billions of dollars in worth (what we call “market capitalization”), the wealth and benefits often don’t flow back to the regular users and community members who actually make the project valuable. Instead, it often gets “captured” by a smaller group.

Who’s Getting the Pie (Right Now)?

The article hints at this by mentioning “venture capitalists and founding teams.” These are the early investors and the original creators of a crypto project. They often get huge rewards through things like “token sales” and “vesting schedules.”

Lila: Okay, “token sales” I might have heard of, but “vesting schedules”? Are we talking about fancy suits?

John: Haha, not quite, Lila! Let’s break it down:

  • Token Sales: Imagine a company selling shares of its stock to raise money. In crypto, projects sell their own digital currencies, called “tokens,” to early investors. These early investors buy them usually at a very low price, hoping they’ll become super valuable later. It’s like buying a concert ticket months in advance for cheap, hoping the band becomes huge.

  • Vesting Schedules: This is a fancy term for how and when these tokens are given out. Instead of getting all their tokens at once, founders and early investors usually get them little by little over several years. It’s like if an employee gets stock options that they can only fully own after working at the company for a certain number of years. This is meant to keep them committed to the project long-term, but it also means they often control a huge chunk of the tokens, and thus a lot of the power and potential wealth, over time.

So, the problem is that while the community is busy building, using, and promoting the project, the big gains often go to those who got in early and have these special arrangements.

The Real Web3 Dream: Community at the Helm

The whole idea behind Web3 was supposed to be different. It’s about empowering everyone, not just a select few. It’s about building a digital world where communities own the platforms they use, where the people who contribute actually benefit from the success they help create.

Imagine if your favorite social media platform was actually owned by its users, and you got a say in how it ran, and even a piece of the profits!

The Game Changer: “Treasury Governance”

This is where the article says “treasury governance will get us there.” This is the core solution they propose to fix the “value capture” problem and bring power back to the community.

Lila: Alright, John, another technical term! “Treasury governance”? Is this like… the government’s money department, but for crypto?

John: You’re on the right track, Lila, just a bit different! Let’s simplify:

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