Ten thoughts on decentralized network governance

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Original Title: “Ten Theses On Decentralized Network Governance”

Written by: Mario Laul, Placeholder Researcher, Cryptocurrency Venture Capital

Compiler: Zhan Juan

Based on my research over the past few years, I have compiled ten paragraphs of thoughts on decentralized network governance. These thoughts include the underlying public blockchain network and the applications (smart contracts) running on it. Among these ten viewpoints, there are not only relatively general, theoretical or descriptive expositions, but also relatively specific, practical or illustrative ideas.

Among them, the first five items are the revised summary of my previous writing; the last five items are from recent observations.

I define governance as the process of applying various design functions or control mechanisms to maintain and guide a system.

Experience 1

Technological and institutional innovations related to blockchain are part of the maturity stage of the information technology (IT) revolution, including the emergence of social and economic organizations in the native form of IT. These organizations are characterized by digitalization, globalization, and increasing degeneration. Centralization and automation.

It was in the later stage of the technological revolution that its key technologies began to change the institutional structure of society. Blockchain and related innovations are part of the more general trend of digitization, computerization and automation-in this world, more and more important system processes rely on formal protocol rules to adapt to the increasingly complex environment. For efficient coordination. Although it looks subversive on the surface, this trend is part of the evolution of what sociologists call the “early organization of bureaucracy.”

However, in terms of managing information and facilitating information-related transactions, more and more cumbersome rules are completed by distributed machine networks rather than by human managers, some of which are global.

Experience 2

The decentralized network is a social arena of symbolic and material production in various fields. On this stage, relevant actors compete and cooperate on specific network resources when providing and consuming products and services available in the network.

To build a field-a game worth playing, one of the important prerequisites is to disseminate information about the resources of interest in the society. At the very least, it is necessary to reach some consensus on why these resources are valuable. The structure of a particular field is determined by the distribution of these resources and extends to the relationships between the entities that make up the entire field. In a decentralized network, this includes everyone who participates in investing, building, operating, using, or otherwise participating in the network.

Governance is a process embedded in the network structure, initially determined by the entity closest to the start of the network. The follow-up actions of network participants either strengthen the existing structure or challenge the existing structure while increasing or reducing the amount and value of available resources.

The structural evolution of the network is strongly influenced by social norms and network rules, including those stipulated in relevant software agreements. Therefore, the power to legally (re)define these norms and rules is one of the key issues in cyber politics.

Experience 3

In addition to traditional market dynamics, one of the primary factors driving the evolution of decentralized networks is the tension between ideology, reality, and financial incentives.

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Although the people involved in the blockchain network have many different opinions in specific areas, they tend to agree on certain ideologies or pragmatism, such as decentralization (resist collusion, minimize single point of control or failure) , Self-sovereignty (personal freedom, ownership and privacy), permission-free access, censorship boycott, open source software, and criticism of excessive intermediation or rent-seeking.

However, what is ideologically desirable is not always technically or sociologically realistic. Blockchain innovators constantly shuttle between the two, trying to avoid the problems that their innovations are meant to solve. At the same time, the impact of short-term financial incentives makes this task even more difficult.

The economic success or mass adoption of a single network does not necessarily depend on strict adherence to certain narrow principles. However, the interaction between ideology, reality, and financial incentives will still have a key impact on the design and development of network governance systems.

Experience 4

Decentralized network governance mainly includes four parts: (1) attracting and guiding the leadership, vision and values ​​of network participants; (2) rules in the relevant software agreement; (3) rules and regulations outside the relevant software agreement ; (4) Community coordination and management.

The initial vision and values ​​behind a particular network are reflected in the founding documents, the details of the network launch, and the personal views and preferences of early contributors. Software protocols are used to define how the network handles the most important information and transactions, which may include rules for implementing changes to the software itself, the so-called on-chain governance. Other rules may emerge independently of the software, mainly through organizations that help coordinate broader community activities, known as off-chain governance, which is usually similar to the governance of traditional free and open source software (FOSS) projects.

The most innovative aspect of decentralized network governance is on-chain components, especially when it comes to on-chain data analysis, tokenization, automation, and novel forms of online voting, which usually focus on software updates or public finances The distribution of resource pools.

Experience 5

The existing decentralized network governance system differs in two decisive aspects: (1) whether the software itself contains the implementation rules for software protocol changes; (2) the degree of formalization and institutionalization of off-chain governance.

The software protocol running on the decentralized network must be updated both planned and urgently. Network participants are generally free to choose whether to interact with the software, so as to continue to participate in or leave the network. The difference in the network lies in the degree of formalization and automation of the software itself used to guide system coordination and decision-making (the relative importance of on-chain governance), which may include the connection with the identity verification process or with specific network tokens Voting mechanism.

Although on-chain governance is formalized by definition, off-chain governance activities are distributed in a wide range, including less formal and less formal networks, as well as increasingly institutionalized networks.

Off-chain governance includes uncoordinated personal actions, private conversations, public activities, online interactions (especially on social media platforms that disseminate materials and memos), activities of various legal entities participating in the network, and activities independent of on-chain governance Voting and decision-making mechanism.

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Experience 6

Avoiding changes to software or other system parameters helps to maintain existing systemic trends; changing software or other system parameters may bring new risk factors, but it is also a powerful tool to promote new systemic trends.

Reducing the perceived need to change network rules and reasonable choices are often referred to as “governance minimization|. In practice, it is equivalent to (1) the rigidity of early design choices (that is, maximizing individual discretion, they define the system To implement one of the most important behaviors of decentralized network governance), or (2) to improve the system’s ability to automatically adjust to the unchanging environment (that is, to pay the least amount of human and material resources). It often takes considerable effort to defend the design features of governance systems and the immutability of control mechanisms. Although a strong preference for maintaining the status quo or strictly following a set of specific rules may hinder the development and improvement of the network, it helps To maintain the existing system characteristics and tendencies.

In contrast, more open and dynamic governance systems are often not stable enough, but they are also more adaptable. By providing reasonable choices for different stakeholders to influence the rules, structure and direction of the network, and respond to changes in concepts or environments, such a network can better solve systemic problems, but it is also more likely to introduce new risks And challenges.

Experience 7

Good decentralized network governance means that while fully resolving the conflicts between different stakeholders involved in the network or affected by the network, it also guides the network through all stages of its development towards more innovative and social practicality Function development.

By cultivating habits and roles, human beings finally form an institutionalization, which can avoid the need to constantly renegotiate solutions for recurring problems-this is equivalent to rule-based manual automation. However, even the simplest and most stable system is rooted in a complex and constantly changing environment. Therefore, the system needs to adapt and evolve, but this may be difficult to achieve due to the adherence to conventions, structural inertia, and the well-organized defense mechanism of interest groups.

The same is true for decentralized networks. In view of the differences in establishment principles and expected uses, it is reasonable to develop different governance systems for different networks. But generally speaking, good network governance coordinates the interests of all stakeholders through a sufficiently flexible system of checks and balances. Unbalanced governance or the inability to resolve conflicts between key stakeholders can cause instability. This is particularly problematic for networks with systemically important administrative infrastructures and large user bases.

Experience 8

In a network that adopts a formal governance system, assigning decision-making power to different stakeholders, including network end users, is an effective form of decentralization and a guarantee to prevent the abuse of centralized power.

Broadly speaking, the most important groups participating in the decentralized network are: (1) technical experts responsible for developing software and operating related infrastructure (or making other contributions in a highly specialized capacity); (2) having a huge relationship with the network Individuals and organizations with economic interests; and (3) users. In practice, there may be overlaps between the three, but each is usually associated with a specific form of decision-making: technocrats (experts), chaebol bureaucrats (involving most of the economic interests), and democracy (the majority of users) ). Decentralized networks often default to technocratic orientation.

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To achieve more inclusive decision-making, the typical first step is to implement a token-weighted voting system, which usually leads to chaebol rule.

More democratic forms of network governance have not yet been fully explored, and some difficult questions have been raised. Who, or what defines democracy and network supporters? Which decisions require a popular vote? Is there a sufficiently secure and privacy-protected voting scheme? Assuming that some kind of democratic checks and balances are needed on the power of the leader, should such checks and balances take the form of direct democracy, representative democracy or delegated democracy? These are all empirical issues specific to the Internet.

Experience 9

In decentralized network governance, the quality of non-expert decision-making is strongly influenced by political communication-a task that requires specialization.

Most organizations, as long as they involve coordinating a large number of personnel in their complex activities, will divide the labor, which leads to the emergence of specialized knowledge and capacity reserves. This kind of specialization already exists in the design, construction, operation and governance of decentralized networks, and it may increase in the future.

In the Internet, power is distributed among individuals, and these people are not necessarily experts in matters they can influence. Therefore, it is necessary for voters to understand the possible impact of their decisions and the relative advantages of various paths forward.

This is the world of cyber politics. In this world, different stakeholders usually use individuals with good communication skills to seek public support for their ideas and plans. Except as passive consumers, most users are unlikely to participate in the technical or daily aspects of network governance, especially when they are satisfied with the status quo. But these cannot be used as evidence against empowering end users, for example, encouraging public debate, accountability, and legitimacy, all of which are particularly important in times of dispute or crisis.

Experience 10

Compared with intelligent automated competitive networks with clear and simple optimization procedures and emergency protection, decentralized networks with unclear or overly complex governance models are often at a long-term disadvantage.

Opaque and inconsistent governance models make it difficult for network participants to coordinate legal behaviors in different situations. This increases the possibility of conflicts, which may lead to fragmentation and network forks.

Compared with networks with governance models that combine simple design principles with the ability to manage change when necessary, networks with overly complex governance models or requiring too many human and other resources are more scalable and adaptable. difference.

A common way to improve the efficiency of decentralized network governance is automation-any technology that can reduce the need for manual assistance in performing tasks or completing the process. However, automated governance mechanisms should be continuously evaluated based on the system trends promoted by these mechanisms, and supplemented with appropriate safeguards to deal with emergencies caused by catastrophic software errors or other extreme events.