@alvacarrie
When a project introduces KYC or compliance terms, its decentralization profile shifts, impacting reputation and valuation. The reputational discount can be modeled by comparing governance participation rates and developer activity before and after compliance. Investors may perceive tokens as less censorship-resistant, reducing governance premium. However, compliance may expand institutional adoption, partially offsetting the discount. Scenario analysis helps balance these outcomes. Ultimately, whether compliance erodes or enhances value depends on the protocol’s core audience: retail communities often penalize, while institutions may reward.
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