"Strategic Decentralization: Building a Successful and Sustainable Crypto Application"

"Strategic Decentralization: Building a Successful and Sustainable Crypto Application"

Introduction:

In the world of cryptocurrency, founders face the unique challenge of not only creating a desirable product but also ensuring its successful operation in a decentralized manner. This means that the product should be owned and operated by a community of users, rather than a single entity. Achieving this balance can be difficult, as the initial steps to building a successful product often conflict with the path to community ownership and regulatory compliance. In this article, we will explore the commonalities between the concept of "良い戦略、悪い戦略" (Good Strategy, Bad Strategy) and the principles outlined in "Progressive Decentralization: A Playbook for Building Crypto Applications." By combining these insights, we can develop actionable advice for crypto founders looking to create and sustain successful decentralized applications.

Finding the Most Promising Opportunities:

A good strategy starts with identifying the most promising opportunities for a company. This requires a thorough investigation into the industry and understanding the changes taking place within it. By conducting extensive research and sharing the findings with the management team, leaders can make informed decisions about the direction of their strategies. Similarly, in the world of crypto, founders must recognize the potential for decentralized community control. This entails understanding the benefits of community participation and control, such as limited platform risk and regulatory compliance. By aligning their strategies with the cooperative economic model of user-owned networks, crypto applications can better serve their users while maintaining long-term health.

Developing a Strong Foundation:

A solid foundation is crucial for both traditional and crypto strategies. In the context of "良い戦略、悪い戦略," a good strategy goes beyond setting goals and visions. It involves formulating a plan that addresses the "why" and "how" of actions, while also leveraging existing strengths or developing new sources of advantage. Similarly, in crypto applications, a strong foundation requires early focus on achieving product/market fit. This stage should be driven by a core team, avoiding design by committee, to find the right balance between product leadership and community ownership. It is important to note that launching a token during this early stage can complicate compliance efforts and should be avoided.

Nurturing Community Participation:

As a crypto application gains traction, founders must shift their focus towards fostering harmony between passive users, active contributors, and the core team. This involves implementing best practices for running the product as an open-source project and carefully considering token distribution. Tokens can be effective tools for distributing value and incentivizing participation, but their distribution should be fair and effective. Testing distribution methods with a managed and permissioned group of community members can help ensure a smooth transition to wider token distribution. Furthermore, founders must plan how remaining tokens will be distributed to reward past contributions and incentivize ongoing participation. This process should involve modeling rational outcomes and collaborating with the community to generate proposals.

Achieving Sufficient Decentralization:

Once a crypto application has achieved early product/market fit and built a robust community, the focus shifts to achieving sufficient decentralization. This stage involves "exiting to the community" by airdropping tokens to users and contributors based on a pre-defined plan. The core team cedes majority ownership and control to the community, reducing platform risk and ensuring regulatory compliance. It is at this point that the token may transition from being classified as a security to a non-security, as the service becomes sufficiently decentralized and independent of a single entity's efforts. The company becomes sustainable, benefiting from fees and growth, while user-owners experience increasing returns to scale.

Actionable Advice:

• 1. Focus on identifying the most promising opportunities: Conduct thorough industry research and share findings with the management team to make informed decisions about the direction of the strategy. Embrace the potential for decentralized community control to limit platform risk and ensure regulatory compliance.

• 2. Develop a strong foundation: Go beyond setting goals and visions. Formulate a strategy that addresses the "why" and "how" of actions, leveraging existing strengths or developing new sources of advantage. Prioritize achieving product/market fit, driven by a core team, before considering token launch to avoid compliance complications.

• 3. Nurture community participation: Implement best practices for running the product as an open-source project and carefully plan token distribution. Test distribution methods with a managed group of community members before wider distribution. Model rational outcomes and collaborate with the community to generate proposals.

Conclusion:

By combining the insights from "良い戦略、悪い戦略" and "Progressive Decentralization: A Playbook for Building Crypto Applications," crypto founders can create and sustain successful decentralized applications. It is crucial to identify promising opportunities, develop a strong foundation, nurture community participation, and achieve sufficient decentralization. These actionable advice points provide a roadmap for founders looking to navigate the complexities of building and maintaining a decentralized crypto application.