Barbarians at the crypto-gate!

What would a “token hostile takeover” look like and what “poison pill” could be coded into a decentralised (blockchain) protocol to prevent this? Before we refer to Andy Bromberg‘s recent hypothesis, let’s discuss why it makes economic sense to “fork” the source code of a decentralised protocol. In his seminal paper, John Pfeffer argues that decentralised ecosystems (e.g. Filecoin) are not as valuable as centralised firms (Dropbox). Rather, they are probably no more valuable than the IT department of the latter with the remaining value released to users. Accordingly, protocols will eventually function as perfectly competitive SaaS. Any malfunctioning (overpriced or underutilised) protocols may be taken over by other developers pursuing arbitrage. That takes us to the steps of a takeover as per Bromberg: coordinate with key suppliers; raise public awareness; execute the fork; airdrop to drive users over; and sell into the market. How to prevent this – with a “poison pill” of course: to encode in the token’s original “smart contract” that if a percentage of tokens outstanding are burned within a specific time period, those tokens are re-issued and distributed pro rata to all the remaining holders. Cannot wait for the first barbarians at the crypto-gate!