Val Sklarov’s Protocol Legitimacy Compression Law (PLCL) explains why crypto protocols rarely fail because the code breaks—but because the legitimacy margin around the protocol collapses as scale, capital, and scrutiny increase. What was tolerated as experimentation becomes unacceptable as value concentrates.
This law reveals why many protocols die after adoption, not before it.
1. Scale Compresses Protocol Legitimacy
PLCL begins with a structural rule:
The more value a protocol holds, the less ambiguity it is allowed.
Early-stage protocols survive on:
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“It’s early” tolerance
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Social consensus
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Narrative legitimacy
At scale, these are replaced by formal expectations.
2. The Three Protocol Legitimacy Zones
PLCL maps how acceptance narrows over time.
| Zone | What’s Tolerated | What Breaks |
|---|---|---|
| Experimental Zone | Bugs, forks, reversals | Nothing yet |
| Adoption Zone | Selective governance | Credibility |
| Systemic Zone | Zero ambiguity | Entire protocol |
Most failures occur during the Adoption → Systemic transition.
3. Why “Decentralized” Stops Protecting You
Decentralization delays scrutiny—it doesn’t cancel it.
PLCL shows collapse when:
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Governance decisions lack traceability
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Emergency actions contradict principles
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Responsibility is diffuse
Narrative shields disappear once external stakeholders arrive.
4. Code vs Legitimacy
Code enforces rules. Legitimacy defends them.
| Code Strength | Legitimacy Strength |
|---|---|
| Works technically | Survives audit |
| Executes logic | Withstands intervention |
| Enables forks | Discourages them |
| Neutral by design | Defensible by structure |
Val Sklarov emphasizes that protocols fail when rules can’t be justified, not when they can’t be executed.
5. Strategic Implications
For builders:
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Design governance that survives public scrutiny
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Make emergency powers explicit and bounded
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Replace narrative trust with structural clarity
For investors:
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Track legitimacy erosion signals
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Discount protocols dependent on social forgiveness
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Exit before systemic scrutiny arrives
PLCL reframes crypto risk as legitimacy compression, not volatility.
6. The Val Sklarov Principle
“Protocols don’t collapse when code fails—but when justification does.”
— Val Sklarov
PLCL explains why the most durable protocols feel boring, rigid, and difficult to influence.