MultiversX Wiki - How to govern the ring’s forge that will rule them all ? (Part 2)
  How to govern the ring’s forge that will rule them all ? (Part 2)
Published by xFoudres | The 12/22/2022  |  Category: Thread

8/ Governance risks

I find it satisfying to understand the different Blockchain ecosystems as micro-societies, which are bound to die, or to survive the harsh laws of economic selection of the Bear Market. According to the theories of evolutionary psychology, what allowed humans to build large-scale societies are stories and fiction, creating a social cohesion that allows collaboration.

MultiversX stands out, in my opinion, quite strongly from other ecosystems, because we have this hooliganism in us that — even if it has sometimes been harmful to us — is one of the reasons why our community is so strong. We have our own community fiction/vision, the one that would make MultiversX the large-scale ecosystem of tomorrow. Sure, today we are not the Blockchain with the most users and developers, but we have managed to build the beginnings of a common morality (we have seen this with the rather majority outrage about projects promoting exit liquidity, rightly or wrongly). We are very attached to this ecosystem in particular thanks to this community fabric, but also because of the brand image that Elrond and MultiversX have been able to develop, which would make me believe that we have a better chance of surviving the group selection that will inexorably affect all Layer 1.

All, cannot coexist, some, will have to die.

It is thanks to the construction of this common morality, this feeling of belonging to something “big”, that unlike other ecosystems, we have a retention rate of users that I would estimate greater, although their attraction remains complicated because of the more significant closure of MultiversX. Some ecosystems are populated more by financial expediency than by attachment or love of its tech, and when that disappears, so do the users and developers. Governance is the next big step to take, as it can both strengthen our community mesh, and gradually unravel it, reducing our chances of survival in the cryptographic jungle.

Because yes, governance has risks. Any system that becomes political will be subject to new problems that were not present before, or to a lesser extent.

Today, if there is tension, it is often between the community and the Core Team, but by allowing the community to take part in governance decisions, you significantly increase the chances of internal tension in the community. This can lead to communitarianism, with users grouping together according to their ideals and the vision they have of governance and the evolution our ecosystem should take. Moreover, we can already notice that between us, the “Lambda” users, and the famous Whales or VCs, not having the same financial power and the latter having a great power on the value of our portfolios, it is easy to essentialize the Whales to malicious actors who always act against “us”. As soon as there is a split between different user profiles, “filter bubbles” can be created, locking each community in on itself. This is a bit what the MultiversX ecosystem is affected by, most users of other blockchains don’t even know that we have an NFT ecosystem for example, because the evolution of our ecosystem doesn’t (yet) cross its borders. Also the virality of information on the networks, especially Twitter, favors extreme opinions because it generates more engagement, it pushes to the annihilation of critical thinking, cognitive ease, and thus, favors the polarization of debates and communitarianism. All these risks can lead the community to split up, to stop moving forward with a common goal, and to vote in a more individualistic way.

Secondly, we must not forget that we have dumb brains, and are often highly irrational in our decisions. Whether it’s FOMOing the latest monkey collection, or blindly locking in our xMEX over four years and complaining about our own decisions the week after. And this will be just as true for our future votes.

We are also all very ignorant, — to a point where mathematicians have already proven that we have worse predictions on social issues than chimpanzees voting by chance — each at our own level, so we can question our legitimacy to vote for decisions when we do not understand the extent of their complexity. Also, this ignorance makes us easily manipulated.

This is why I believe it is necessary to implement a right to ignorance in the governance while promoting honesty, for example through the ballot I presented earlier which remains valid even with incomplete answers, but also through the implementation of an expert council elected by the community, the Core Team, the validators, etc.

This council would be necessary in my opinion to lead the discussions in a healthy and framed way, but also the governance as a whole in order to avoid all the problems mentioned above, in the way of an arbitrator. But for this, it must be composed of people with ethics and a strong love for our ecosystem. When voting, community members who are honest enough to admit their ignorance on certain issues could delegate some or all of their voting power to one or more people on this expert board, judging that they will be able to cast a more informed vote than they can. Of course, this council must have limited powers so as not to be able to bypass community governance, to make decisions that would be centralized, their incentives must not be monetary in order to avoid any drift and their legitimacy must also be questioned at any time. The construction of such a council would require a new article and dozens of discussions. How to elect its representatives, how to allow their dismissal, what should be their field of action, etc, etc, etc…

In any case, the implementation of this governance, whose importance should grow with the maturity and growth of the network, should not be subject to feed growing tensions in the community, but precisely to regulate them so as to strengthen our collaboration and our community links which will be our best assets to assert our place as Layer 1.

9/ Summary of the essential characteristics of a DAO according to me

A lot of concepts and a lot of problems, governance is a problem that has been debated for many centuries and it is not in this article that we will solve it, but let’s make a list, as exhaustive as possible, of everything that we need, in my opinion, to build a healthy governance:

  • A mathematical function or sharing of voting power that will allow for an acceptable distribution of voting power, both for the largest contributors, as well as for the community as a whole that is necessary to our ecosystem, while being resistant to Sybil attacks.
  • A governance that balances plutocracy, adhocracy, epistemocracy, netcracy, meritocracy and democracy, where everyone would have voting power in accordance with their participation (be it monetary, intellectual, infrastructural), use and engagement in the MultiversX Blockchain and the xExchange.
  • Define the framework for interaction between the community and the Core Team in order to structure the governance influence network.
  • Allow the establishment of a group of experts elected by the community to act as a link between the Core Team and the community, and allow any user to have the possibility to delegate, partially or fully, his voting power to one or more experts.
  • A ballot adapted to each type of decision to be made, resisting irrelevant alternatives and useful votes. The Condorcet or Mehestan ballot is a very good candidate.
  • Establish a wisely constructed quorum that will ensure the representativeness of a vote and thus avoid decisions being voted on by a small committee and for that small committee, and giving significant power to abstention. This quorum should not, however, be immutable in order to avoid any risk of permanent immobilization.
  • Build a system whose incentives promote the common good and have a utilitarian approach to governance.
  • Thwarting the fundamental principle of politics by creating incentives for those currently in power to favor the interest of the group rather than their position of strength in governance.
  • Build a governance that is resilient to manipulation, over time and to all eventualities, however unlikely.
  • That all of the above components promote governance decisions that result in win-win Nash balances, whether between the Core Team and the entire community, or between large and small wallets.
  • Punish “Free-Riders”, such as KYC farmers at Launchpads or wallets/projects being identified as scammers in order not to fall into a vicious circle that would prove harmful to everyone.
  • Do not encourage the emergence of proposals that would cause the community to suffer the price of anarchy, leaving us to believe that our individually optimal vote is necessarily optimal for the community as a whole.
  • Build a system that avoids as much as possible creating too much internal tension in the community so as not to break the community fabric that makes MultiversX so powerful.

10/ Conclusion

The problematics mentioned throughout this article easily call into question a model that would be democratic, an egalitarian governance, by the Holders and for the Holders; for that, we would have to be perfect beings, without cognitive biases, capable of favoring the interest of the group rather than our individual interests, and having a total and perfect knowledge of the immense range of subjects that a governance has to deal with, which we are definitely not.

As Churchill said:

“Democracy is the worst political system, except for all the others already tried in the past.”

DAOs give us the possibility to imagine a new way of governing smaller communities, but for that, we must be able to accept and be aware of the extent of our ignorance. In any case, this is what I have tried to show in this article, that the extent of our ignorance of the complexity of this subject is immense, that perfect governance surely does not exist, but that centuries of evolution and the reduction of this ignorance can lead us to build a system which, although imperfect, can at least avoid many flaws. As the mathematician and Youtuber Lê from the channel “Science4all” would say, from which I borrow a large part of his work, which has helped and accompanied my reflection on this subject:

All models are wrong, some are useful.

It is with this observation that I end this very long personal reflection on governance. I hope that it will have helped the community to better understand the basics of this topic, that I did not make too many mistakes in the numerous technical explanations and that it will be able, without pretension, to inspire the MultiversX Core Team for the construction of the xExchange governance.

I would like to thank all the people who helped me build this article, especially the builders of the French community 🖤

Thank you and respect to you for reaching this line, your thirst for knowledge is unmatched. ⚡

Source :

ALL the 34 video of Science4all about the democraty from a game theory perspective :

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xFoudres
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On-Chain Analyst with some dev notion | I (try to) write my Thread in English to help everyone in the crypto twitter space

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