I think there is a false dichotomy at play. The presumed options are "We centralize power, or things go to shit." Meanwhile, groups like Steem Flag Rewards showed that grassroots action was possible and effective. Blacklists were developed to warn of abusive accounts. All that was still needed was a response to bid bots, and they began to change their behavior with the pre-Sun fork.
Decentralization works. The HIVE fork proves that responses to centralization are demanded by the community. We need choice, not a control scheme.
Power mongers, like Justin Sun, tend to go through complex mental gymnastics to justify their power grabs.
I am concentrating on paradoxes at the moment. False dichotomies tend to produce paradoxes and people see centralization as the only solution to the paradox.
Whenever you see a group of people stymied by an absurd paradox, there was properly someone who injected false dichotomies into the system.
BTW, it amazing how Sun's reasoning is similar to the large private equity funds that have come to dominate world markets.
Groups like Bain Capital use precisely the reasoning you described to justify their efforts to consolidate markets. They would start with a declaration that a market segment was fragmented. They would then build a huge capital pool to roll up the market claiming that this would impose discipline on the market. The private equity firm would make billions. The companies they created tended to be unstable and would cause entire markets to implode. Bain Capital was the driver behind the collapse of The Sports Authority, Toys Were Us, Gymboree and Staples and many more companies.
I've started examining some of these merger chains. The merger chains appear to do little more than concentrate wealth. The private equity firms tend to justify their actions based on false dichotomies as you mentioned.
Sun is not the only one.
False dichotomies fuel political discourse, too.
"If you don't like the police, next time you're in trouble, call a crackhead!"
"If you don't support the troops, feel free to stand in front of them."
"If you oppose the COVID-19 shutdown, it must mean you want people to die!"
"If you don't like Obama, you must be racist!"
"If you don't like Trump, you must be a commie!"
The left/right split is the greatest false dichotomy of all.
Progressives and conservatives both seek greater centralization. Conservatives are more prone to present their ideas as false dichotomies. Progressives like to present paradoxes with centralization being the only solution to the paradox.