Miles Jennings, general counsel for a16z, argued that traditional regulatory approaches, such as antitrust measures, often fail to address the real issues of centralization.

According to an blog post by Jennings, centralized control in technology, finance, and artificial intelligence creates significant consequences—limiting public discourse, financial access, and the flow of information.

Big Tech, Big Banks, and Big AI dominate these sectors, leaving users with little say over the platforms that shape their lives. While decentralization offers a solution, it requires strong incentives to become viable.

Centralization is efficient, allowing companies and governments to coordinate resources, make quick decisions, and scale effectively.

However, Jennings argues that this concentration of power stifles competition, restricts financial access, and subjects users to arbitrary rules. Historically, decentralization has been difficult to implement because it lacked the technology to operate at scale. 

But blockchain networks like Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) have demonstrated that decentralized ecosystems can function efficiently, with trillions of dollars in value flowing through them.

Incentivizing decentralization 

The challenge now, Jennings notes, is incentivizing decentralization. Blockchain-based projects often struggle to balance regulatory uncertainty with the need for distributed governance. Many opt for centralization under the guise of decentralization, creating risks for users. 

Regulatory frameworks need to evolve, reducing compliance burdens as projects decentralize. Instead of applying traditional finance laws to decentralized finance, tailored policies should recognize the differences between intermediary-led and trustless systems.

Jennings emphasizes that decentralization fosters competition, creativity, and freedom while distributing value more fairly. The key, he argues, is creating legal and economic incentives that encourage businesses and networks to embrace decentralization in a sustainable way.