Latham Fintech partner Jenny Cieplak discussed consortium governance on a panel hosted by WEF at the Consensus: Distributed Conference.

Jenny Cieplak, a member of Latham & Watkins’ Fintech Industry Group, recently discussed blockchain consortia governance issues as part of a panel hosted by the World Economic Forum (WEF) at the Consensus: Distributed conference. A replay of the panel discussion is available on the Consensus: Distributed website, and the segment focused on consortia governance starts at minute 59.

Cieplak demystified the concepts of blockchain consortium governance and the diplomatic nature of consortium governance in general. Consortium structures are generally useful for any type of technology accessed by a broad user base, as multiple parties — by using the technology in different ways — provide insight into their needs. Such structures are especially useful in blockchain development, driving network effects and giving consortium members a stake in a successful launch.

The panel also discussed the viability of on-chain governance and reasons that many networks have not yet successfully adopted a fully on-chain governance mechanism. Flexibility — the ability to address unforeseen situations — is key for governance mechanisms, and the on-chain mechanisms currently available do not provide the nuance of a governing board, which can take into account all aspects of an issue and come up with innovative solutions.

Cieplak also addressed key challenges that consortia face, including technical challenges such as onboarding and integration with already existing technologies as well as governance challenges such as lack of focus. Cieplak noted consortia that successfully address such challenges are typically led by a small group — or even a single person — with the vision and energy to drive participation.

This panel discussion expanded on the WEF’s recently launched Blockchain Deployment Toolkit (Toolkit), which was designed to help organizations responsibly develop and deploy blockchain technology based on their business need. Cieplak drafted the Toolkit’s section on Consortium Governance, and Latham lawyers both drafted and contributed to several other sections of the Toolkit.

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