Web3 as Decentralization Theater? A Framework for Envisioning Decentralization Strategically

Abstract Web3’s raison d’être is decentralization. Quite problematically, however, few industry analysts can articulate what “decentralization” really entails; whether it differs at all from the notion of “distribution,” and how either construct can be measured with observable data to enable a meaningful analysis of the industry’s core promise. Instead, Web3 is akin to a decentralization theater in which archetypical characters, who resonate with the likes of Hamlet and Godot, enact decentralization based on fictitious narratives. After critically reassessing these narratives about decentralization, this paper offers a fresh perspective to evaluate, less theatrically and hopefully more rigorously, future claims about “being decentralized.” I argue that the crucial issue lurking behind the decentralization narrative is the dispersion of authority within blockchain platforms, which consists of two fundamental dimensions, namely the dispersion of information and of decision-making. The value proposition of Web3 will not be taken seriously until the industry can provide reliable indicators of authority dispersion and demonstrate that the latter affects strategic outcomes for blockchain platforms, including innovation, growth, and value creation.