Every technology needs a community to coordinate around it. In web3, decentralized projects run without a CEO or a board—the people holding a stake make decisions, allocate budgets, and approve roadmaps. Yet governance, the human side of technology, is usually treated as an afterthought. Most teams realize it matters only when something breaks.
Sam McCarthy is Ecosystem Lead at DAOstar and Governance Lead at GoodDollar, a non-profit protocol that pays out a daily universal basic income (UBI) token to close to a million people across 180+ countries, with the team now building an economy around it. He just wrapped a nine-week community redesign of GoodDollar’s governance system, and gave us a peek into the process, showing why governance is a muscle worth flexing.
Most people think of governance as the boring part of crypto. Why are you interested in it rather than, say, trading?
For me, governance fulfills crypto’s actual use case: how to coordinate capital online, both human and financial. It’s where our lives are contested and power is redistributed. And as more of our lives have moved online, that’s become super important.
Think about it: our digital lives are managed by just a small, tiny amount of companies—two, three, now with AI companies coming in—dictating the ways we can express ourselves, the power we have over the systems we use every single day. The promise of crypto was that it represented a break from that incumbent model.
Governance in these new crypto networks is how that manifests. It’s how people drive a greater expression of their values and beliefs.
How did you find your way to governance?
In my “first career,” I worked in the traditional finance industry. With that background, the natural entry point to crypto was decentralized finance (DeFi). That’s where I really got pulled in, especially during “DeFi summer” in 2020. Still the most incredible time in crypto.
Pretty quickly, I realized what I was actually interested in wasn’t the financial protocols themselves, but how they were being managed. The governance and the formation of the organizations around these protocols, the DAOs—or Decentralized Autonomous Organizations—that’s what gripped me. I loved seeing members collectively make decisions through onchain voting, with so much experimentation happening, where anybody who wanted to participate actually could.
So yeah, I kind of fell into it. DeFi was like, wow, this is really cool. New financial protocols, new financial applications, and it makes sense that the traditional finance system should be redone. But then I was like, wait a second… the true value isn’t in this new technology. It’s in the social layer being built on top of it.
When you walk into a protocol that’s been running for years and the governance isn’t working, where do you start looking for the problem?
There can’t really be an answer other than the people. I’m never going to be a technological solutionist, where it’s like, oh, we just have to build more technology.
Most of the technical solutions to governance have, for the most part, been built. At least the primitives—ways for people to express their preferences, values, and beliefs within these primarily digital environments. Some would even say there’s too much of that expression now, and it’s created a lot of noise in DAOs, where everyone talks over everyone else.
The problems aren’t technical. They’re a people problem, a social problem. And that’s not new to crypto, or to society. It’s probably been with us since the dawn of civilization.
Governance is complex, messy, and always going to be a challenge. The heart of the problem is figuring out the needs and objectives of the people involved, and how best to express their voices to achieve them. You have to get feedback from the stakeholders themselves before designing any system or technological solution.
How do you diagnose flawed governance?
It’s everything we’re seeing in DAOs today: limited engagement and inclusivity in participation. The hard part is that a system can look inclusive on paper, where everybody can technically participate, but the implicit barriers are harder to spot. You get plutocratic governance, where 10 wallets own 99% of the vote, or back channels that don’t show up in the public record at all.
Part of why this gets messy is that relationships are at the heart of governance, and you can’t exactly put everyone’s connections on the blockchain. The human side of governance is hard to capture in a fully transparent system.
Even so, some problems jump out at you. You look at a DAO, and you can tell right away, something’s off. Maybe nothing’s getting decided, or what does get decided is coming from a few people acting in their own interest. Or maybe it looks like it’s working, but only in a traditional, centralized company sort of way. That misses the whole point of what makes a DAO valuable: distributed control and democratized access to that control.
Other times, you’re looking at a DAO that manages serious money, and the issues only surface once you dig into the social layer: who’s actually making the calls, where the power actually sits. That’s where the harder problems live.
The most interesting case study, for good and bad, is Arbitrum DAO. The participation they’ve built, the money on the line, the years of operating fully decentralized.
The other example I’d point to is Ethereum itself. It’s not often thought of as a DAO in the traditional sense, with token-voting and so on, but it has many of the same features: open deliberation, distributed control, formal consensus rules enforced by technology. And it operates at a scale nothing else comes close to. The Merge is the best case study I can think of in decentralized collaboration. Ethereum might be the strongest example we have of a functioning social governance layer in crypto.
Let’s get to GoodDollar specifically. When you took the Governance Lead role, what was the mandate?
I came in at a moment when the project was changing focus.
Historically, GoodDollar has been a UBI protocol for individuals: just an easy way to claim the G$ token daily. The shift isn’t about moving away from that mission, but about building real utility around it. More places to spend the token, more ways for people to actually use it.
That shift meant rethinking governance too: how individuals and projects participate in the protocol, and how they shape its direction. On top of that, GoodDollar was hitting a familiar set of problems: waning participation, unfair distribution of power, and a general lack of clarity around how things work.
So the mandate was to build a new governance framework that lowered the barriers to taking part. But within that, I had room to figure out what was actually needed alongside the community, which I think is the most important part.
You ran a nine-week collaborative redesign with the community. What was that like?
My thesis going in was simple: people want to feel like their participation actually matters. When they feel that, they show up differently. They engage more, and they bring more energy with them.
So the structure had to be tight. Three themes I wanted to cover, three weeks each. Every week followed the same rhythm. A forum post would go up, giving people time to react and think. Then, a community call in the second week to talk things through. After that, a synthesis week, where I’d go back through everything and post a summation to keep the feedback going. Theme by theme, over nine weeks.
The biggest surprise was the energy people brought to governance. It’s not something I see much outside of crypto.
Governance is a muscle. That’s the visual I think of it in: you have to keep flexing it to be able to keep flexing it. Knowing where you can have a say, being proactive enough to make your voice heard, is hard. And it’s one of the most exciting things about this whole experiment with DAOs and decentralized governance. It’s created a space where people can flex that muscle again. They have to learn how, because life online has largely taken that ability away from us. It’s something that has to be relearned.
The other surprise was how people saw themselves and their role in GoodDollar: as a community of capital allocators. A community that manages how money moves through GoodDollar and across the ecosystem, building toward a more collaborative, positive-sum economy. That showed me where the new system needed to go.
And honestly, this is the moment to do it, while we still can. Interest in funding public goods and decentralized governance is fading. If we don’t keep it alive, no one else will.
One of your findings was to start lean and centralized before decentralizing. In crypto, that’s almost heresy. Why?
Governance is about making decisions, specifically in uncertain, dynamic environments. If things never changed, you wouldn’t need governance at all. Things would just stay the same and that would be fine. But crypto might be the most dynamic environment there is. You miss a week and it feels like you miss a lifetime. That’s why governance matters even more here.
Now, the nature of these projects and protocols is genuinely unique. Highly competitive, profit-driven, high-risk, high-uncertainty, and pre-product-market fit in most cases. In an environment like that, the strengths of decentralized governance aren’t necessarily what you need. You need fast decisions, operational execution, and that’s not what a decentralized system is going to give you.
Decentralization in itself isn’t the goal. You want it to give you outcomes that matter more: scaling and long-term building, extraction resistance so no single entity can capture all the value, resilience, innovation through diverse perspectives, legitimacy. That last one is what CoGov is really about. Making people feel their voices are heard, and that they’re actually shaping things, is one of the best ways to keep them engaged for the long haul.
But none of that is the main challenge when you’re starting out. So in a fast, chaotic environment like crypto, starting more lean and centralized is the right call. Managing the spectrum between centralized and decentralized is its own skill. If you’re making decisions quickly, obviously you don’t want thousands of people involved in every one.
Walk us through what the redesigned system actually looks like.
The framework still needs community validation, but here’s where I landed.
GoodDollar’s user base is huge. For a crypto project, enormous. And one of the strange things I’ve noticed across DAOs is that when you spread the governance surface too wide, engagement drops. People stop feeling like their voice carries weight, and they stop showing up. So the instinct was to go the other way. A smaller, more focused group with real skin in the game. Inclusive, but where participation actually means something.
That led to two houses.
The House of Alignment is the first one. A tight group of projects that receive distributions directly from the GoodDollar protocol in return for staking G$ in the reserve and showing up to govern. At the start, governance there is narrow on purpose. It’s just about the distributions themselves, which projects get how much. Over time, I’d want it to grow into the bigger stuff most DAOs eventually handle. Treasury, protocol upgrades, the works.
The vote about which projects participate, and how much they each receive, is going to happen quarterly. I’m designing it this way because I want to come back to flexing that governance muscle. I want people to get into the rhythm of showing up and making real decisions, so by the time we scale the system, the habit is already there.
The second house is the House of Citizenship. That’s going to be open to the wider GoodDollar community: the users, other partners, other stakeholders. One person, one vote. This is the part of the system where I really wanted to push back against plutocratic governance, which is the failure mode you see almost everywhere in DAOs.
The bigger idea behind all of this is something I’ve been calling a network alignment system. The mechanic is pretty simple. GoodDollar has a few things going for it: a currency that stays relatively stable, a reserve backing it, a big user base, an ecosystem that’s growing. Distributions go out to aligned projects, those projects put the token to work in their own ecosystems, activity around G$ grows, the resource pool grows, and the next round of distributions is bigger than the last. A virtuous cycle, if we get it right.
The single line I keep coming back to is that this is built as a way to foster deeper collaboration with aligned projects toward financial inclusivity. The space for public goods, financial inclusion, mission-driven crypto, it’s shrinking fast. There aren’t that many of us left. So the projects still doing this work need to find each other and build together.
What I’d love is for this to become a Schelling point. A place the remaining projects gravitate toward, with GoodDollar offering what it has: a relatively stable currency, a reserve behind it, a big user base, an ecosystem that’s growing. Not as the center of gravity, but as a starting point worth gathering around.
If someone’s about to design a governance system, what’s the one thing you’d want them to know going in?
Sometimes it feels less like I’m a systems designer, governance lead, or whatever you want to call it, and more like a people manager. Closer to what crypto projects would call a community manager. It’s mostly people work, and that surprises a lot of folks.
You can’t just put a mission out there and expect people to align around it and magically participate. Even with a good structure, even with incentives. As we’ve seen in crypto, incentives tend to be a short-term Band-Aid. Long-term engagement comes from being genuinely engaged with the people who are going to participate.
It’s personal interactions, personal conversations, relationships, and being able to build those over a digital medium, which is already a little distancing. That’s a lot of work and can be very difficult to do well.
Even something as simple as this: instead of sending out a group message, send individual DMs reminding people to join the call. Sounds small, but it matters. People ignore messages all the time, even DMs. They’re busy. You have to respect that, but also engage with them in a way that actually motivates them to show up.
What resources or skills would you point someone to if they wanted to do this kind of work?
Two books, both really great. The Death and Life of Great American Cities by Jane Jacobs is really about urban design, but the lessons in embracing organized complexity and diverse, local knowledge are amazingly applicable to governance systems. And Governable Spaces by Nathan Schneider is a bit more directly about the governance of our digital lives and how technology should support, rather than replace, human politics.
On the skills side, governance pulls from a lot of places. Interpersonal skills are essential, and learning to build them in a digital environment, if you’re working in a digital-first organization, is one of the harder parts of the job.
There’s a lot of systems design, too. Technical solutions aren’t the end game, but you do have to design something clear, where people know how to participate, and it’s easy for them to. Clarity is what empowers people to show up.
And then there’s fairness. People have to believe in the legitimacy of the decisions being made and the way power is distributed. That takes some thinking, and ideally some experience. Within crypto, if you’re working in a DAO, or from movement building, co-ops, or impact investing, if you’re outside of it. None of it is quick. But when you get it right, you’re giving people something rare: a real say in the systems that shape their lives.