Why has BitShares failed?
BitShares cannot afford to wait for the second coming of its messiah (i.e. Dan Larimer) once he is done with Steem. It needs to find a new leader, fix DPOS, and move on. Or slowly sink into oblivion.
This post is about the "why", not about the "if".
If you believe everything is fine and BitShares still has a bright future, please stop reading, as my reasoning will only annoy you and you'll probably perceive it as trolling or FUD.
First, I'll list things that IMO are not the reason:
The technology. Definitely not. Graphene is absolutely powerful, for me only Ripple can match its robustness and efficiency. Also, it's not the GUI - it's still not perfect but good enough when compared to similar projects.
The Larimers' (Stan & Dan) decisions. They've made a lot of mistakes and changed their plans and promises several times, hurting a lot of early investors, and, as a result, many of them dumped their shares. IMO this was inevitable as this is the very nature of projects that dare to enter uncharted territories: they need to pivot a lot before they have a chance to succeed.
The demand for the product. For a long time I thought this was the major weakness. Who needs a fully decentralized exchange (DEX) when scams like MtGox seem to be less and less frequent? Who needs Market-Pegged Assets (aka smart-coins) when projects like Tether or Uphold seem to be good enough for most people? Those are still valid issues, nevertheless I think a well implemented DEX offering reasonable liquidity for both UIAs and MPAs has a secure place on the market.
Lack of certain features, e.g. stealth, bonds, VM for smart-contracts. By comparing BitShares current capabilities to the existing features of other projects, it's clear to me that it's not the lack of features that prevented wider adoption.
IMO, the main reason lies in the very heart of the system - DPOS (Delegated Proof of Stake). Until recently I thought DPOS was a rock-solid foundation for solving the biggest problem in the crypto-space: the blockchain governance issue.
But unfortunately it turns out that DPOS has a major flaw. It's not a security flaw but an incentive scheme flaw. DPOS does not have an in-built mechanism to effectively encourage brave, long-term decisions. Instead, it favors lack of decisions or short-term decisions that give fairly immediate outcome.
The corporate world has a lot of internal flaws but its efficiency in executing large-scale projects is unquestionable and one of the crucial parts of it is the concept of board of directors headed by a CEO. The problem is that DPOS, in its current form, does not offer any solution that could replicate the role of the above structure. Besides, there is no incentive to vote, and the voting system does not even differentiate between long-term holders and short-term ones. As a result, BitShares has ended up in a fatal decision paralysis.
In a DAC or DAO there needs to be some entity which is elected by the shareholders but has the ability to make tough long-term decisions. The alternative is to use decentralized technology but retain centralized governance by the existence of a company that de facto controls the business strategy of the blockchain associated with it. This path is currently followed by Ripple, Ethereum, Lisk and... Steem. And it seems to work.
I guess some will argue that the situation with BitShares is not so bad: gradually stealth and other features will be implemented, liquidity on the DEX will slowly grow and everything will end well. My judgement is that this is not good enough, at least not in the crypto-space where there is so much competition and new capital flowing in. BitShares cannot afford to wait for the second coming of its messiah (i.e. Dan Larimer) once he is done with Steem. It needs to find a new leader, fix DPOS, and move on. Or slowly sink into oblivion.