Blockchain Governance, Szabo's Law & Justin Sun's Frozen Steem!

Cover Image Source - Digitally remastered by the author

Steemit was sold to Chinese entrepreneur and Tron founder Justin Sun a few days ago. Steemit was launched in 2016 and it was the first application built on the Steem blockchain. It is regarded as the first decentralized social media or publishing platform in the history. It already had 1 million plus users but yes, it lacked marketing. Steemit is an ideal example of communities meeting cryptocurrency to achieve mass adoption. Justin Sun’s Steemit acquisition found mixed reaction from the community initially. Some went gaga and some remained cautious. Then a Tronlink post started to create fud by declaring that token swap was must and Steem would be migrating to Tron blockchain and existing as Tron token. The controversial post was deleted later. Poloniex exchange, owned by Justin Sun lead consortium, declared token swap support for Steem. Things became hazy!

Debates were going on. The Steem witnesses were watching the matter closely. Wondering who are Steem witnesses? The STEEM blockchain requires some people to create blocks and uses a consensus mechanism called DPOS (Delegated Proof of Stake). They validate the blocks and they are called the witnesses. Anyone can become a witness although that person must be elected through votes made by the Steemit Community. Steem power is needed to vote for the witness.

Steem Soft Fork 0.22.2

Let us go back to the earlier days of Steem. Steem was ninza-mined during the initial days and almost 70% mineable Steem was mined by Steemit Inc. The large stake of the Steemit Inc. ninja-mined Steem always created power imbalance in the decentralized blockchain but it was accepted by the community as Steemit Inc. had all the incentives to not abuse the power. It was clearly declared by Steemit Inc. during many occasions that this ninza-mined stake would be used for the development of the Steem eco-system and it would not interfere in the blockchain governance. With the change of ownership, the same trust factor does not work basically. For example, the new owner may use the ninza-mined steem to vote for blockchain governance and take total control of the blockchain. It may lead to a blockchain governance takeover. Recently, in an astonishing move, Steem witnesses introduced Soft Fork 0.22.2 to freeze the ninza-mined stake of Steemit citing that the communication on the company acquisition was scattered and conflicting! It was quite revolutionary incident in the history of blockchain. Now Justin Sun can neither move his Steem nor vote for blockchain governance! Yes the soft fork is reversible but the Steem witnesses will reverse it only if they find trust in the new owner of Steemit. Looks like a revault? Seems that.

Image Source – Technical details of Soft Fork

Justin Sun had to write an open letter to Steem community to announce a town hall with top 50 Steem witnesses. Justin Sun wants to create the trust factor with the community apparently! But will the community accept? The day, Justin Sun published the open letter to the Steem community, Tron Foundation also published their weekly international report. It clearly stated that steemit community and all related dapps would be moved to Tron blockchain. More fud! Ultimately it is a chaotic scenario! But were Steem witnesses right to introduce the soft fork ethically?

Image Source – Tron Foundation weekly report published on 24th Feb’20

Szabo’s Law

Nick Szabo, a famous computer scientist and cryptographer from the 90’s era, famously popularized his crypto law. The law simply states to not implement changes to the blockchain protocol unless the changes are required for the technical maintenance purpose. Szabo’s law is a big excuse for the developers to refuse to make changes to the blockchain protocol when any blockchain dispute arises. We can remember the famous case of ‘Ethereum Dao hard fork’. DAO was a complex Smart Contract built on Ethereum with many features. There was a hacking attack on the Dao smart contract and huge ether was stolen. A soft fork was proposed to prevent the hacker from cashing out ether but it was not successful. The more conclusive solution emerged as a hard fork. The hard fork had the only purpose to retrieve all the stolen ether. This proposal generated huge controversy among the Ethereum community, which was split into 2 groups and ultimately it lead to split of Ethereum into two separate blockchains. Present day Ethereum is one blockchain and another is Ethereum Classic (they stood for ‘code is law’ and blockchain immutability). Ethereum wanted to innovate and embrace experiments while Ethereum Classic remained traditional.

“A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.”
- Ralph Waldo Emerson, American Poet

Yes, Szabo’s law says to minimize blockchain goverance. It says to minimize politics and it locks blockchain governance to create an autonomous software. But can really governance be achieved without politics? Szabo’s law is aimed at shutting down political debate to achieve a pre-determined political end. Does it look anti-social? Frictionless society is utopian thought. Frictionless governance too! For the quest of creating a frictionless governance, we can’t surrender to be governed by whatever means. Ultimately, the way we want to be governed can change. Can law change? Yes, often it changes as per the circumstance! Disputes will arise in the blockchain space too and we can’t shrug off responsibility to manage disputes by saying ‘code is law’. It is important to abandon Szabo’s law to embrace an open crypto legal environment. Crypto law is nascent or non-existent basically. We don’t know clearly where we are moving forward in the crypto law space. It is important to remain flexible to adapt to the changing environment. Code is not god! We created codes to facilitate governance. We should accept to change codes also to improve governance for the better welfare of the stakeholders.

Future of decentralization should not be dictated. Decentralization is all about openness in decision making. Every dispute, which arise in blockchain governance should be dealt with openness rather than conventional narrow imagination of legal system. An insecure and aggressive crypto legal blockchain governance will take us nowhere. Blockchain governance can’t be final as it is still in the evolution stage. Blockchain governance can’t be minimal also as we still don’t know the minimalistic approach leads to which path. Blockchain governance should be formed in such a way so that we take pride in being in the blockchain space rather than being in an insecure state. Abandoning Nick Szabo’s crypto law will help mass adoption of blockchain by ensuring its integrity and ethics. Let’s embrace human decision making! I should come back to the question again! Were Steem witnesses right to introduce the soft fork ethically? You decide!