When Ostrom Meets Blockchain: Exploring the Potentials of Blockchain for Commons Governance

Abstract

Blockchain technologies have generated enthusiasm, yet their potential to enable new forms of governance remains largely unexplored. Two confronting standpoints dominate the emergent debate around blockchain-based governance: discourses characterized by the presence of techno-determinist and market-driven values, which tend to ignore the complexity of social organization; and critical accounts of such discourses which, while contributing to identifying limitations, consider the role of traditional centralized institutions as inherently necessary to enable democratic forms of governance. In this article, we draw on Ostrom’s principles for self-governance of communities to explore the transformative potential of blockchain beyond such standpoints. We approach blockchain through the identification and conceptualization of six affordances that this technology may provide to communities: tokenization, self-enforcement and formalization of rules, autonomous automatization, decentralization of power over the infrastructure, increasing transparency, and codification of trust. For each affordance, we carry out a detailed analysis situating each in the context of Ostrom’s principles, considering both the potentials of algorithmic governance and the importance of incorporating communities’ social practices into blockchain-based tools to foster forms of self-governance. The relationships found between these affordances and Ostrom’s principles allow us to provide a perspective focused on blockchain-based commons governance.

Analysis of the Potentials of Blockchain for the Governance of Global Digital Commons

“…This article and the theoretical framework it relies on (Rozas et al, 2021b) contribute to linking commons literature with blockchain technologies. Previous literature includes: Cila et al (2020), who draw on the aforementioned blockchain affordances to develop a framework with three mechanisms and six design dilemmas for blockchain-based platforms to support local forms of CBPP; Calcaterra (2018), who discusses how Ostrom's principles could be applied to DAOs; and Shackelford and Myers (2017), who review the applicability of Ostrom's principles focusing on the governance of blockchains (instead of with blockchains).…”

“…This critical stand, however, tends to consider traditional centralized authorities as inherently necessary to enable democratic governance. As a result, as we have previously argued (Rozas et al, 2021b), this critical stand has ignored the potential of some collectives to self-organize. Again, the issue is not new.…”

“…This lack of commons-oriented perspectives into the emergent debate of blockchain-based governance led us to consider incorporating the principles of commons governance present in self-organized collectives into the development of blockchainbased tools (Rozas et al, 2021b). Our aim was to contribute to building perspectives which neither rely on the logics of private markets, as implicitly assumed by these former perspectives, nor on the coercion of traditional centralized institutions, as in the case of the latter accounts.…”

Decentralisation: a multidisciplinary perspective

“…Scott, 2015;Swartz, 2018). These efforts range from cryptoeconomics whereby economic concepts are used to achieve information security properties (Brekke & Alsindi, 2021;Buterin, 2017;Zamfir, 2015) to token economics (Voshgmir, 2019) to new ways of organising commons (Rozas et al, 2018) and ideas such as bonding curves (Balasanov, 2018;Titcomb, 2020). In contrast to the decentralised markets of Hayek, lately, market experiments on such distributed ledger technologies (as well as indeed in market design efforts by economic disciplines, see Frankel et al (2019); Ossandón (2019)) have been perceived less as a perfect, universal coordination mechanism and more in terms of social engineering to achieve certain behavioural outcomes.…”

An overview of decentralized autonomous organizations on the blockchain

“…The potentials of blockchain for governance are already being studied in the literature. Relevant features include distributed tokenization, self-enforcement through smart contracts, decentralization of server-less infrastructure, autonomous automation, transparent processes, or codification of trust [32].…”