Venture Capitalist a16z has delegated the majority of its governance rights in decentralized finance (DeFi) protocols, said the firm this week.

In its transparency report, Jeff Amico, a partner on its crypto team shared the details of the program and said it will open source all of its component parts.

“Unlike traditional companies, protocols are meant to be governed on a decentralized basis. This unlocks their core value prop (neutrality) and ensures they’ll remain open to anyone who wants to use/build on them,” said Amico on Thursday.

Early shareholders in these networks need to do what they can to help catalyze the transition to long-term community governance and token delegation, according to a16z, is one of the most effective ways to do that.

Not just delegation, the firm is calling for a “strong” form of delegation that reduces surface level concentration while optimizing for quality, diversity, engagement, and independence.

Towards this goal, the VC firm has built a formal delegation program around these principles over the last year and used it to delegate well over half of its voting power in protocols like Compound, Uniswap, and Celo to a broad network of qualified delegates.

These qualified delegates include non-profit organizations (NPOs) like Kiva and Mercy Corps; global businesses like Deutsche Telekom; crypto startups like Gauntlet, Argent, and Dharma; university organizations like Stanford Blockchain Club and Blockchain at Columbia; and community leaders like Getty Hill.

Current a16z delegate network

This current list of its delegators, however, isn't unchangeable as the firm says it plans to continue to build it out in terms of diversifying the types of delegates working with.

The best practice for token delegation, it said, is to delegate early, elevate community leaders, recruit outside perspectives, ensure delegate independence, and provide ongoing transparency.

A16z has opened sourced its framework for delegation so that others can adopt it as well.

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