Intriguing read. Question: Would token holders knowing that the protocol has been acquired in itself (no leveraged buyout, etc, just a straightforward buying of 51% of the tokens) cause token values to drop?
The thing I struggle to understand wrt a lot of these M&As is that they heavily compromise decentralization, whereas the point of blockchains is to be decentralized in the first place. Though my understanding is that they compromise on decentralization for easier development of the protocol in the short-term?
Relatively new to this space, so feel free to clarify any misconception I may have. Thanks for the work!
The anticipation and purchase of tokens by the acquiring protocols would probably drive up price initially. By the time speculation has passed, I would assume that the value would flow to the larger protocol in the end (making their token stronger because their ecosystem has expanded).
However, you're arguably correct that it compromises decentralization as the tokens get more concentrated. Protocols doing direct straightforward buying could look towards implementing bonding incentives for their users as a mechanism to distribute more tokens to token holders at a discount when the goal has been accomplished. This leads to more decentralization and potentially more traction as well.
Other option to consider is that the larger protocol will control the "smaller" protocol through their governance (hence meta governance) so while one protocol becomes more centralized in their token distribution, it can still be controlled in a decentralized way.
Intriguing read. Question: Would token holders knowing that the protocol has been acquired in itself (no leveraged buyout, etc, just a straightforward buying of 51% of the tokens) cause token values to drop?
The thing I struggle to understand wrt a lot of these M&As is that they heavily compromise decentralization, whereas the point of blockchains is to be decentralized in the first place. Though my understanding is that they compromise on decentralization for easier development of the protocol in the short-term?
Relatively new to this space, so feel free to clarify any misconception I may have. Thanks for the work!
The anticipation and purchase of tokens by the acquiring protocols would probably drive up price initially. By the time speculation has passed, I would assume that the value would flow to the larger protocol in the end (making their token stronger because their ecosystem has expanded).
However, you're arguably correct that it compromises decentralization as the tokens get more concentrated. Protocols doing direct straightforward buying could look towards implementing bonding incentives for their users as a mechanism to distribute more tokens to token holders at a discount when the goal has been accomplished. This leads to more decentralization and potentially more traction as well.
Other option to consider is that the larger protocol will control the "smaller" protocol through their governance (hence meta governance) so while one protocol becomes more centralized in their token distribution, it can still be controlled in a decentralized way.
Appreciate the reply, sensei!