In an interview with TheStreet Roundtable, Blockdaemon CEO and founder Konstantin Richter offered some advice to cryptocurrency founders: Embrace governance. In an industry that is inherently anti-establishment, the value of professional oversight is often overlooked.
Konstantin’s perspective stems from his interactions with major financial institutions like JPMorgan and Goldman Sachs, which have been reluctant to enter the space for a number of reasons, including the tendency for projects not to have traditional structures in place.
Building trust in a scandal-ridden industry
Cryptocurrency is rife with scams, solicitations, and other types of fraud. Earlier this year, Hailey Welch launched $HAWK, a meme coin based on a viral video in which she starred. It collapsed within hours, losing millions of dollars.
In addition to the thousands of meme coins that pop up every day, the collapse of a number of high-profile cryptocurrency businesses has also hurt the industry’s image. Konstantin specifically mentioned FTX, a company that collapsed in 2022 and had no board, “I still see a lot of that.”
In early April, Mantra’s OM token, an established and well-known token, fell more than 90% in a single day. Mantra also does not have a traditional board, relying instead on a governance token that gives holders voting rights.
“Young founders and open source system builders have an inherent skepticism of regulation — I completely understand that,” he explained. “But without a professional board to oversee you and guide your thinking, you’re missing out on real entrepreneurial opportunities. It makes you more vulnerable to dangerous behavior.”
Governance Challenges
Implementing proper governance in the cryptocurrency space is not easy. The most obvious risk is that you risk alienating crypto purists who view regulation as central control. Smaller projects also struggle to afford professional boards, which could exacerbate the gap between well-funded projects and community projects.
Konstantin’s call to founders is clear: in order to be accepted by the public, projects need to mature. If users can trust the businesses they interact with, this will stimulate growth and innovation, not hinder it.
