Vitalik warns about overlooked decentralized design in crypto projects

Ethereum co-founder Vitalik Buterin recently published an essay titled “The Balance of Power,” highlighting a fundamental issue in the cryptocurrency industry. It points out that many projects focus solely on commercial aspects during development and consider the challenges of decentralized design only as an afterthought, despite their equal importance.

The Need for Both Business Model and Decentralized Structure

According to Buterin, project teams typically concentrate on establishing a sustainable business model to ensure continuous resource allocation and team operation. However, he argues that designing a decentralized model to prevent excessive concentration of power within the system and minimize potential risks should be treated as an equally or more important challenge.

The success of a project requires both a sustainable business foundation and a robust structure that prevents power from being concentrated in a single entity. Lacking this balance, even short-term growth may come at the expense of long-term reliability and stability.

Natural Decentralization Seen in English and Open Protocols

Buterin emphasizes the distinction between cases where decentralization occurs naturally and those where intentional design is necessary. In natural language systems like English, the absence of centralized control and the coexistence of multiple language users inherently maintain a decentralized structure.

Similarly, open internet protocols such as TCP, IP, and HTTP lack clear centralized control points, making it difficult for a single entity to dominate. These systems are fundamentally built with decentralization embedded in their architecture.

However, most crypto projects do not operate in such “naturally decentralized” environments. Instead, true decentralization is achieved only when teams actively design protocols, token distributions, and governance structures.

Designing Power Structures as a Critical Industry Challenge

Buterin stresses that how to avoid the pitfalls of centralization while maintaining flexibility and operational efficiency is a key challenge the industry will face in the long term. Project leadership should not only aim for business success but also revisit the power structures and incorporate decentralization as a strategic goal on par with the business model.

This principle should be integrated from the early stages of project design. Retrofitting existing power structures and stakeholder relationships is extremely difficult. Therefore, the recommendation for crypto projects is clear: decentralization is not merely an ideal but an essential design element that must be embedded from the outset to support the project’s sustainability and growth.