Aragon vote shows the perils of onchain governance


#1

Important read for FOAM fans.


#2

Not a very surprising outcome. There do not seem to be many alternatives in place, I found some interesting development here


#3

I think voter apathy is not only on blockchain. Real life too.


#4

yes, US elections is something like 20-30% turnout. Blockchain voting across the board is much less turnout.

I found this comment in relation to discussion on the Aragon whale votes and MakerDAO (also of note, it is a fallacy that “code is law” and is proven by recent legal action, in the case of MakerDAO they make much effort to only let tokens go to good actors given how sensitive and manipulative voting is.)https://www.reddit.com/r/MakerDAO/comments/bkcb3l/maker_will_face_similar_issues

OK, but what is the alternative? The argument against a fully democratic vote is that people who have less invested in the outcome of the project (time or money) have far less to lose by a bad decision. Indeed, a fully open vote may invite people who are actively interested in working against the project to vote on an outcome that damages the project. National systems do not allow non-citizens to vote under the assumption that citizens are at least somewhat invested in the success of their nation. In a distributed online system “citizenship” is to some degree determined by the amount of investment in the project, and the people with the most investment have the most to lose by a decision harming the project. So I can at least see that there is a straightforward and simple numeric “voting := investment” function that can be written here to address this.

I have nothing invested in any DAO system, but if I were to have some I would at least want some assurance that it was protected against spoilers to protect that investment because obviously I would have done that wanting to see the project succeed. I also would not want to see my voting authority completely nullified by a single party but I am at least “used” to this system since this is also how corporate voting works.

So if you were to design a system limited by a mathematical function which determined its outcome, what would be the most fair thing to you that also addressed these concerns?

As I see it, these issues effect all blockchain voting protocols and is not new information and not specific to FOAM. Relative to the other voters, we have seen a larger voter be able to singlehandedly determine the outcome already. Now with increased participation of larger stakeholders what was once a big fish is now a small fish. The scale of the situation has changed but the nothing has changed. As before in the wave of challenges the largest voters determined, this continues.Anyone upset by this who did not notice the same situation in the challenges before on a smaller scale of tokens is fooling themselves that something new is afoot. The data shows many challenges so far were determined by the largest voter.

The biggest promise so far seems to be around quadratic voting, but more specific to token registries perhaps much more nuance in how a point can be completely removed. Futarchy also seems promising.

Novel on-chain governance designs

It’s important to note that “one token, one vote” is merely one simple implementation of on-chain governance that has been experimented with to date. New blockchain projects are on the cusp of implementing novel on-chain governance designs, borrowing concepts like:


#5

It’s strange to hear all the lamenting about “failures of on-chain governance”. Is it “one token, one vote” system, where tokens were distributed through traditional market mechanisms? This is exactly what corporate governance is, except corporate tokens are called “shares” and guarantee right to profits. So I’d say this kind of on-chain governance works as designed, no less, no more.

I think people who are disappointed with Aragon voting outcomes expected something closer to democratic civil governance. Well, corporate shareholder governance operates differently, it’s well-known and studied. See, for example, Michael Duffy on corporate plutocracy and small shareholders:

there are […] a number of critically important distinctions between governance in the civic and the corporate sphere. Two of the fundamental principles of democratic civil governance are, firstly, that the voting franchise is extended to every adult member of the polity and secondly, that each vote is as near as possible to equal value. In the corporate realm, however, neither of these principles can be presumed. Not every stakeholder will be a member (shareholder), and of those who are members, there is no equality of voting power, as votes attach to shares rather than to shareholders.

Another difference between civil and corporate governance relates to the mobile nature of the constituency in the corporate realm. These points of difference provide a starting point for understanding the plight of small shareholders in large corporations.


#6

False. This is significantly worse than corporate governance. It’s 1) mainly anonymous, and 2) more liable to profit-seeking that isn’t aligned with the goals of the project/company itself, at least in the case of FOAM.

Who said that mimicking corporate governance was the goal anyway? For most of us, getting away from corporate governance/plutocracy is the central point of crypto.


#7

Novel on-chain governance designs

Futarchy definitely would be interesting to test. I also hope some novel tech-enabled implementation of meritocracy will emerge.


#8

I do not believe anyone has said that recreating corporate governance is the goal, but there are hard realities around how to govern protocols, as we are seeing today with FOAM and across Bitcoin, Ethereum, 0x, MakerDAO, Aragon, Decred, Cosmos, Tezos, Polkadot etc.

DAO’s were originally referred to as DAC’s by Vitalik, Decentralized Autonomous Corporations. Very much in the seed of the idea is a corporation that can own itself and be operated by a smart contract. The original example is a fleet of self driving cars that can own themselves and set prices and distribute profits - and users can purchase a stake.

When we were working as a Decentralized Architecture Office, we held a workshop on corporate governance, decentralized board rooms, equity crowdfunding architecture with the question of “Can a Building Own itself”

The entire crisis point of “The DAO” was around corporate governance and the question of “is code law”. This lead to the Ethereum hardfork, another governance dilemma. Despite many cypherpunk ideologues thoughts on “code is law” from the stand point of the United States Government and its jurisdiction they have been very explicit that code is not law. See the issued report on the DAO.

The point however is that across all of these Proof of Stake and Governance protocols age old problems will be faced around decision making, fairness, power distribution and voting procedures and this is why boardroom metaphors are often utilized.

Are there any prototypes of Futarchy out there you have seen? By tech-enabled implementation of meritocracy do you mean power in the protocol based on your contributions and work?


#9

Interesting governance report from Kyber:

Includes reference to dxDAO of Gnosis team (who, incidentally, are the ones I would expect to implement the first futarchy experiment, given their connection to Hanson).