Interview Transcript
Christian Arita:
Hey Spencer, how’s it going?
Spencer Noon:
Good. How’s it going, Christian?
Christian Arita:
Good. Thank you for joining us. Happy to have you here. I’m going to ask you a couple of questions today. The first question I have for you is, what’s important in governance or what defines whether a protocol has good governance?
Spencer Noon:
That’s a great question. And I think before we kind of get into what exactly good governance looks like, it’s important to first just dissect all the different pieces of governance and I think there are three different pieces here. Notably, you have hard governance, which is literally how a protocol changes with code, you have soft governance, which is how the community builds consensus around a change with kind of discussion, and then finally, you have meta governance, which is discussing how governance even works in the first place. And I would say that we don’t have many years of experience of governing on-chain protocols. But you do kind of know when you see it when you see good governance. I think there’s a lot of engagement, you have a lot of different stakeholders who are at the table. And yeah, I think in the future, new norms will emerge but overall, those are kind of the trends that would put the protocol on the right direction.
Christian Arita:
That makes sense. And in the protocols that you follow, and some of the research that you do, what makes a good proposal?
Spencer Noon:
Yeah, so I like to think about proposals from a risk management perspective. For starters, anytime that the code of a protocol is going to be changed, you want to make sure that the code that is written is really good. And so, what does that mean? It’s probably been audited; it’s been reviewed by multiple parties. And you have kind of a vote that… it’s ready to be voted upon, I should say. And then off-chain, there is I would say, a lot of discussion about that change. Because changing a protocol is not something that you should just do on a whim, you really need to make sure that it’s the right decision for all stakeholders. And so, it could be on discourse, on telegram, discord, wherever the community is organizing, I would say there needs to be enough conversation to have some type of rough consensus. And then you bring it to a vote.
Christian Arita:
So, third question, which might be a little similar to the second question. You mentioned risk management and the long-term vision of the protocol. But when you vote on a proposal, what goes into your decision-making process?
Spencer Noon:
I think, above all else, you need to make sure that you clearly understand what the proposal is going to be doing and I think that means at a surface level, what is going to be changed. But two, is there going to be any new precedent that is set because this protocol is going to be changed in that way. And then I also try to look at the public materials that are available, read up on all of those and then talk to key figures. One of the beautiful parts about crypto is that our community is extremely open and transparent. And so, whether it’s Twitter or any of these kind of online places, you can usually reach out to whoever and they’re willing to talk, and I definitely take that up all the time.
Christian Arita:
And in speaking about these key figures, what skills or characteristics do you think future crypto governance leaders should embody?
Spencer Noon:
Yeah, this is a little bit of a tricky question, I would say because no protocol is 100% the same. But there are some archetypes that I look for, you have people who maybe are well versed in risk management or they’ve operated something like this before, maybe in legacy finance or some other type of centralized ecosystem, maybe investors, liquidity providers, developers. I think the key insight here is probably, there’s not a one size fits all governance, stakeholder. It’s, you really need kind of a diversity of thought and opinions to bring something, I guess get the most out of your governance process.
Christian Arita:
Got it. Thank you. And last question. What are you most bullish about in the Defi ecosystem, whether on Ethereum or on any other networks you’re following?
Spencer Noon:
You know there’s so much going on and it’s really easy to get caught up in all the newest kind of… there almost like money games right and Defi. But I always come back to just these basic tenets. One is tokenization, we’re just bringing so much, so many different assets on-chain, all of this liquidity. And then number two, this composability, “permissionlesly” interacting with other protocols is I think one of the novel kind of aspects of this space and you can look at something like stable coins as being one of the first real-world assets that’s being ported on to blockchains and just the ecosystem that’s emerged with that, lending, borrowing, leverage. I find that to be amazing and I’m always frankly just looking for more of that, how do we solve some of the problems that are plaguing traditional finance or the economy. Things like negative interest rates, just overall distrust in our system. I think Defi really offers some real solutions. And yeah, it’s a little bit boring, but I just want to see as much liquidity as humanly possible brought into Defi.
Christian Arita:
Well, that’s all the questions I have for you today. Thank you for joining us.
Spencer Noon:
Yeah, thanks so much for having me.
Christian Arita:
Spencer Noon, DTC capital
Spencer Noon
Lead Investor at DTC Capital
Spencer Noon leads investments at DTC Capital. He first joined the blockchain industry in 2014, starting Bitcoin ATM company BTCity. Previously Spencer was an early employee at SeatGeek as well as an investment management analyst at UBS.
Christian Arita
StakerDAO community member
Christian is responsible for the research, proposal development, and product implementation of STKR, BLND, wXTZ, wALGO products by StakerDAO. Prior to working within crypto full-time, Christian worked at Deutsche Bank in research covering Global Macro and Equity Strategy. Christian graduated from UC Santa Barbara with a degree in Economics & Accounting and he lives in San Francisco, CA.
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