Test your knowledge of introductory decentralization concepts and on the different types of decentralization.

To submit answers, click on ‘Submit Proof’ and either 1)Type your answers directly into the text box or; 2) Upload a file with your answers.

Please note: to avoid potentially losing your work, we recommend working in a document editor e.g, Google Docs, and uploading that file as proof

---

Question #1: What is the goal of this paper?

a. To clarify why people in the crypto community organize around the concept of decentralization

b. To help readers gain the necessary knowledge to join a DAO

c. To explain how decentralization can help DAOs avoid regulation

d. To clarify why decentralization is superior to centralization

Question #2: Broadly speaking, decentralization can be broken down into which of the following components? (select all that apply)

a. Technical

b. Economic

c. Legal

d. Financial

e. Regulatory

Question #3: How has the concept of decentralization been used historically?

a. To describe local governance structures where the responsibilities of planning & decision making are not made by a centralized authority, but rather by members of the group

b. To describe voting mechanisms where votes are tallied by autonomous machines

c. Decentralization was used historically to provide political freedoms to people living under authoritative regimes

Question #4: Why has centralized authority prevailed throughout human history?

a. Because it makes decision making more effective

b. Because it can cover a lot of geographic ground

c. Because although decentralization is better we haven’t had the technology available to make decision making effective over large geographic areas

Question #5: Which two mechanisms does blockchain enable that makes decentralization more effective?

a. Member representative governance models

b. Member developed and accessed decentralized economies

c. Member developed rules and regulations

Question #6: Does the term “decentralization” appear in the Bitcoin whitepaper?

a. No

b. Yes

c. It depends what is meant by “decentralization”

Question #7: Coinbase engineer Yuga Cohler is famous for saying what about Ethereum’s transition to proof-of-stake?

a. If successful, it will “prove the viability of decentralization as a social organizing principle”

b. “Proof-of-stake will help revive regenerative economies”

c. “Proof-of-work is far superior to proof-of-stake”

d. The ability to cover large geographic ground is a limitation of centralized authority

Test your knowledge on the important concepts of technical decentralization

Question 1: Which component of decentralization relates primarily to the security of web3 systems?

a. Legal

b. Technical

c. Economic

Question 2: What are questions to ask when considering technical decentralization? (Choose all that apply)

a. How is the airdrop distributed?

b. How do members vote on governance decisions?

c. How are upgrades made?

d. What blockchain underpins the application, and what tradeoffs does that blockchain force onto the application?

e. Can users easily ‘ragequit’ the system — i.e, can users exit the system and use (or build) different methods of interacting with the core protocol?

Question 3: What would make an application technically decentralized? (select all that apply)

a. If the clients required to access the underlying smart contracts are permissionless

b. If users own their data (data portability)

c. If governance decisions are made by a broad group of participants in the form of a DAO

Question 4: Does a project need to be on a blockchain to be technically decentralized? And why?

a. Yes

b. No

c. Why? (input response)

Test your knowledge on the important concepts of economic decentralization

Quest Chain #3 - Economic Decentralization

Question 1: What are the warning flags for a poorly designed economically decentralized system? (Include all answers that Apply)

1. A board of directors controls the outcome of proposals
2. A small group of people control the Code-base for the protocol.
3. The blockchain ledger is maintained in an Excel spreadsheet
4. In a token distribution, the founding team keeps 10% control over tokens and distributes 90% to early contributors
5. Tokens are distributed in a private sale to ICO

Question 2: If Blockchains allow for systems that are NOT Reliant on central leadership, What are 2 examples of benefits endowed to Decentralized Organizations.

1. Open-source software communities with embeddable, transparent economies.
2. Golden Parachutes for Mercenary CEO's
3. Allows for the balancing of incentives between developers of the application, contributors to the application, and users of the application.
4. A Board of Directors that get a bonus each year.

Question 3: Economic decentralization is only 1 Part of a Three pronged System of Decentralization components. Explain how even a sufficiently “Economically” decentralized system could fail, due to “Centralized” components in the other Two Decentralized Systems.

Technical Decentralization-

Legal Decentralization-

Question 4:

Decentralization is our most important tenets, The benefits of decentralized systems are censorship-resistance, data portability, and resilience to adversarial attacks.

Give an Example of each of these tenents playing out in the real world with properly Economically Decentralized Systems.

Question 5:

There are good-faith critiques of distributed decision-making systems, including the necessarily-centralized focus required by early project teams, the tragedy of the commons , and the voter apathy that can manifest in these types of horizontally-distributed decision-making processes.

How would you use Incentive’s or Game Modeling to Combat these 3 Common issues?

(Give a quick reply to 2 and a deeper exploration of a Solution for the third)

Test your knowledge of legal decentralization concepts.

To submit answers, click on ‘Submit Proof’ and either 1)Type your answers directly into the text box or; 2) Upload a file with your answers.

Please note: to avoid potentially losing your work, we recommend working in a document editor e.g, Google Docs, and uploading that file as proof

---

Question #1: The Securities and Exchange Commission is the only regulatory body for digital assets

a. True

b. False

Question #2: Does a defined standard for the concept of legal decentralization exist today?

a. No

b. Yes

Question #3: What activities should NOT be considered when determining if a project is legally decentralized?

a. Taxation

b. Liability

c. Ownership

d. Intellectual Property

e. Reporting and Privacy

f. Member compensation

Question #4: Blockchain systems are significantly different in which legal areas? (select all that apply)

a. Equity

b. Ownership

c. Control

d. Voting

Question #5: What are important factors that regulatory bodies would look for when determining if a project is legally decentralized? (select all that apply)

a. the levels of influence that early project contributors retain**

b. transparency of information amongst participants**

c. the level of information symmetry amongst participants

d. the number of nodes operating in the network

The paper has a plethora of great links! We had a difficult time selecting only three additional readings. After a lot of deliberation, these are the ones that we finally landed on:

• Principles and Models of Decentralization
• Chris Winfrey Tweet
• The Meaning of Decentralization

For each of the three readings, please answer the following questions:

1. What are three interesting things that you learned?
2. How can you apply these learnings to your job?

Please answer the following open-ended questions:

Scenario #1:A business has 100 employees and a 7 person board of directors. Their current governance process is quite centralized because although employees submit proposals for the monthly governance meetings, the board hand-selects the proposals that will be discussed at the meeting. Not all proposals make it into the agenda.

What are some ways that this business can decentralize its governance process?

*Scenario #2: A foundation is creating a scholarship fund to send underprivileged kids to university. The foundation’s members are quite progressive and understand the value of decentralization. They are brainstorming how best to disburse funds to the universities in a transparent, autonomous, and decentralized manner.

Let’s say the members came to you for advice. What are a few ideas that you would give them?

Choose ONE of the next two scenarios to answer:

Scenario #3: Starting a decentralized sports franchise

A group of friends wants to pool their funds and start a sports franchise in a permissionless and not exclusive way. What advice would you give them?

Scenario #4: Flamingo DAO

Read the Flamingo DAO docs and answer the following question:

How are Flamingo DAO members benefiting from decentralization?