From Technical Constraints to Institutional Choices: Navigating the Governance Trilemma of Blockchain in Green Trade

Abstract

Sustainable trade requires verifiable, granular, and trustworthy data across multi-jurisdictional supply chains. This paper argues that blockchain’s binding constraints are institutional, not technical, and proposes the Green Trade Blockchain Governance Trilemma: no design can simultaneously maximize (i) transactional efficiency, (ii) regulatory verifiability, and (iii) decentralized governance with commercial privacy. Comparative cases—TradeLens, IBM Food Trust, Everledger, and Power Ledger—show divergent institutional choices and outcomes: TradeLens faltered under perceived hegemonic control; Food Trust succeeded via a buyer mandate; Everledger thrived through symbiosis with trusted authorities; Power Ledger scaled within a regulatory sandbox. We further analyze the Oracle Problem as the key limit to verifiability and assess privacy-enhancing technologies, especially zero-knowledge proofs, as partial mitigations that protect sensitive data while enabling compliance checks. We conclude that success hinges on context-specific institutional design—certified oracles plus verifiable computation—rather than a one-size-fits-all stack, offering actionable guidance for policymakers, consortia, and firms building credible green-trade infrastructure.