Reorganization and Participation in Decentralized Platform Ecosystems: Evidence from Blockchain Forking

Abstract

Like any organizational system, platformecosystems reorganize to update its alignment with theinternal and external environments. However, unlikereorganizations of centrally managed platformsperformed by the owners, reorganizations ofdecentralized platforms ecosystems do not rely onformal authority. Instead, the network self-reorganizesto renew the structure, rules, and information to evolve.Little is known about how self-reorganizations influencethe participation of various types of networks. In thisstudy, we investigate nine reorganization events onEthereum, a blockchain-based decentralized smartcontract platform, to unpack how self-reorganizationrelated to hard forking influence participation in thedevelopment, validation, transaction, andcomplementor networks. We find that, whileparticipation increases across all networks show asmall increase after hard forking events, more complexdynamics are at play within each network that builds ondelicate trade-offs between participation structure,configuration, and incentives. Our findings haveimplications for blockchain research as well as forstart-ups building decentralized applications on top ofdecentralized smart contract platforms