The Rise of On-Chain Governance Protocols
Here’s a compiled list of great resources where you can learn more about Tezos and Tau-Chain, two decentralized consensus protocols that implement a Nomic-based system of on-chain governance where stakeholders initially have power over future design choices, not mining pools.
I’ve included some notable quotes and personal comments from each resource. I would love to hear your thoughts on the idea of on-chain governance and Nomic-based protocols in the comments below!
Tezos
EB136 – Arthur Breitman: Tezos - A Self-Amending Crypto-Ledger
Quotes from Author Breitman:
What people are going to value is going to depend on what they perceive other people are going to value. It’s sort of a beauty contest...Essentially, if there’s a perception that a certain fork is valid or that a certain fork has authority, then people are going to be following that. That is what will essentially control the governance (2:18).
The idea of the game, Nomic, is that you start with a set of small rules, but those small rules allow for changes to the rules themselves. If you’ve ever played Nomic, you know that the games can be pretty crazy. That’s because the rules are designed to be very open ended. In Tezos, we have open-ended rules, but we also start with a seed protocol which will define the first rules by which you will be able to make changes. Those rules will be conservative. In general you don’t want to have many changes. You only want to have a change if there is a clear majority in favor of that change, and the idea is to progressively become attracted to a better governance system. So depending on when you start on this governance landscape, you can either diverge and get something that’s completely crazy and useless, or you can converge towards good governance. That’s where I’m hoping I’m placing the original protocol in (5:48).
Personal thoughts:
Breitman again stresses the importance of the seed protocol by bringing up a concept in mathematics called “Basins of attraction” (36:58), which is defined by Wolfram Mathworld as “the set of points in the space of system variables such that initial conditions chosen in this set dynamically evolve to a particular attractor.” He mentions a few of the rules he is developing into the seed protocol (S1) at 11:30 and his implementation of approval voting at 13:15, which may later evolve into more advanced voting systems such as Futarchy. If you were to implement the rules to S1, what would they be? This raises deep philosophical and game theoretical questions. For example, a voting system without many participants (but many token speculators) in the early days of Tezos may be highly susceptible to gaming by malicious actors. I would be interested to hear your thoughts in the comment section.
Quote from paper:
Most importantly, Tezos supports meta upgrades: the protocols can evolve by amending their own code. To achieve this, Tezos begins with a seed protocol defining a procedure for stakeholders to approve amendments to the protocol, including amendments to the voting procedure itself. This is not unlike philosopher Peter Suber’s Nomic[4], a game built around a fully introspective set of rules.
Quote from paper:
Last but not least, the proof-of-work system puts the miners, not the stakeholders, in charge. Forks for instance require the consent of a majority of the miners. This poses a potential conflict of interest: a majority of miners could decide to hold the blockchain hostage until stakeholders consent to a protocol fork increasing the mining rewards; more generally, they will hold onto the hugely wasteful system that empowers them longer than is economically beneficial for users.
No matter what innovations other protocols produce, it will be possible for Tezos stakeholders to adopt these innovations. Furthermore, the ability to solve collective action problems and easily implement protocols in OCaml will make Tezos one of the most reactive cryptocurrency.
Personal thoughts:
We are beginning to see the immense influence large mining pools have over critical decisions in PoW protocols, such as the upcoming decision in Ethereum to accept or decline a hard fork which would return funds from the attacker to DAO investors. I agree in that the stakeholders of Ether should have the power to make this decision, not mining pools (nor exchanges. I might write about the need for a decentralized exchange in a future post).
Quote from website:
Though every governance scheme is subject to pitfalls, governance by vested stakeholders is typically a more sustainable practice than oligarchy.
Tau-Chain
Excerpts from the paper:
“If law-making is a game, then it is a game in which changing the rules is a move.” - Peter Suber presenting Nomic [10].
Tau-chain can be defined by several equivalent definitions:
• A shared db of rules, with a client that is able to change the rules, obey the rules, infer new rules from given rules, and make sure rules are consistent.
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• A decentralized Nomic game.
Let's Talk Bitcoin! #261 Understanding Tauchains Interview
Quote from Ohad Asor:
The first users will form, on the Tau system, the rules of the root chain and how rules are changed. This raises the very question of the rules of rulemaking of rulemaking (15:10).
Personal comments:
Tau-chain, like Tezos, implements a Nomic-based system of governance, but it’s underlying technology can be thought of as a completely generalized P2P framework with a consistent, decidable programming language called Tau. As a completely generalized P2P framework, Tau-chain will initially not even have a cryptocurrency to incentivize nodes/miners of the root chain. Asor notes that stakeholders may vote to implement said cryptocurrency, but he argues that the root chain may be able to incentivize itself from the applications built on top of it using the Tau language. One such application is a futuristic marketplace Asor will develop on top of Tau, called Agoras, which is currently undergoing a pre-sale. Ultimately, the decision will be up to the stakeholders.
Tau-chain uses new, state-of-the-art advances in computer science, and has already implemented many core features such as an automated theorem prover. If you are interested in learning more about the underlying technology, I recommend reading the article below, which I found to be a very thorough and clear. Yet, as a relatively non-technical person, it took me a few days to fully understand the ideas at a basic level:
A discussion and description of how Tauchain works by a non-expert
Looking Forward
I thought it also might be worth including Vitalik Buterin’s stance on on-chain governance which he shared in a reddit thread:
vbuterin on reddit:
IMO on-chain governance is a bad idea. You want "loose coupling" where the community can refuse to accept a fork if it got in-protocol acceptance by gaming the governance in some way (eg. bribes, hacks); every user should be required to manually opt-in to every hardfork as a final step.
…
Sure, there is gaming happening now, but there are limits to how far the gaming can go; for example, a hard fork proposal to inflate the bitcoin supply by 10 million to donate to the Hillary Clinton presidential campaign would almost certainly fail, regardless of the amount of astroturfing, censorship and trolling that took place. With a pure on-chain governance mechanism, if built incorrectly then an attack could shift the incentives in such a way that it would actually succeed and there would be not a single thing that we would be able to do about it.
Final thoughts (feel free to discuss in the comment section):
Do you agree with Vitalik or with Breitman and Asor on the subject of on-chain governance?
What rules (if any) would you first implement (as S1) in a Nomic-based protocol before releasing it to other users?
Also, this is my first published article on Steemit! I am very interested in feedback. If you are interested in learning more about revolutionary technologies in the world of crypto, artificial intelligence, and more, follow me on Twitter @miles2045 for updates on when I post new content.
Great Post! very informative.