We are done with the preface, introduction, problem, solution, economic model, and utility of the Pi network. The articles I have published so far, though simplified, are based on the network’s whitepaper. Two more to go, and after this governance article, I will conclude with the roadmap. Once this is completed, I am thinking of publishing Pi updates and addressing some fears out there on the web about the future of the project. With that, I also intend to revisit the whitepaper articles and reflect on what the Hive blockchain network can learn from them.

What Governance Means in the Pi Network

Now, let us go to governance. However, before we proceed, I would like to have a few disclaimers.

First, we must understand that the topics we are discussing here are not political but from an economic, financial, and business perspective. I think this disclaimer is important to identify from the outset to avoid misinterpretation, though some, of course, would argue that we cannot escape being political since we are challenging or intending to replace the existing system.

There are many terms under discussion on governance that can be misinterpreted. I would like to be clear here that the Pi network is not building a state within a state. It is not rivaling the country of the Philippines. Though sometimes we read phrases like "building a nation within a nation" in the crypto space, this expression should not be understood politically. Moreover, the Pi network is not building a global government in a political sense. So, I hope that is a good start and everything is clear to all of us.

Let us now proceed to the discussion about governance.

What does the Pi network mean by governance?

This is what the white paper says:

Cryptocurrency for and by the people.

This reminds us of Article 2 in the Philippine Constitution that says "sovereignty resides in the people and all government authority emanates from them." In cryptocurrency, Pi's concept of governance is for the good of the many, and governance is by the many. That's how I understand that phrase.

For us to appreciate this type of governance, we need to compare it to the kind of governance of the first generation of cryptocurrencies, like Bitcoin, Ethereum, and others.

I have mentioned several times that trust is extremely important to a successful monetary system. And governance plays a big role in maintaining that trust.

Over the years, even after the open mainnet launch, we will see changes in Pi's protocol. The process of making those changes has an impact on the trust's sustainability.

Although the concept of governance is very important, it is often overlooked in the crypto space.

Despite the fact that the principle and heart of Bitcoin and other crypto currencies is decentralization, the opposite happened. Only a few hold the first-generation cryptocurrencies. This resulted in the concentration of financial power in the hands of the few.

For most of us, the concept of DAO is new. It is a popular governance idea in the crypto world. It stands for Decentralized Autonomous Organization.

As previously said, the core of innovation in blockchain technology and cryptocurrencies is decentralization. Therefore, blockchain technology has made decentralized governance possible, a form of organizational structure that is unfamiliar to most people. In contrast to conventional businesses, which operate "within the legal frameworks of a particular state," a DAO is only an online entity. Similar to how a company's regulations are outlined in legal papers, a DAO's rules are encoded in a set of "smart contracts." Just review what we mean by "smart contracts" as discussed in a previous article.

The great thing about DAO is that it is easier for people all over the world to engage and connect since it is more transparent and open.

Types of Governance in Cryptocurrencies

In cryptocurrency, there are four types of governance:

Still controlled by the founder, as seen in private companies in traditional business.
A council of expert developers and established crypto founders.
Users elect representatives to make decisions concerning project development. It is like a representative democracy type of government that exists in almost all countries. Good in principle and on paper but far from reality.
And lastly, the DAO.

Many crypto projects mention the DAO as their goal. One way to do it is by issuing governance tokens and distributing them either by airdrop or by buying from the market so that the owners can obtain an influence as to the direction over the future of a specific project.

The direction Pi wants to go is the fourth type of governance—the DAO!

Pi Network’s Two-Phase Governance Model

There are two phases in Pi's governance model:

Provisional Governance
Constitutional Convention

What is provisional governance?

To the best of my knowledge, Pi had this form of governance from 2019 to December 2020. This kind of governance was in place when Pi had fewer than 5 million users. Therefore, the core team was very important at the time, and the governance model was comparable to that of Ethereum and Bitcoin.

Then, the change occurred. Phase 1 and Phase 2 transitions are fairly seamless. Some of the features in Phase 1 are still under development, including:

Core Team's reliance on community input.

Through the mobile app, the "core team has been soliciting community input and engaging with Pioneers." So, Pi accepts critiques and suggestions, and we can see this in the "open-for-comments features of Pi's landing page, FAQs, and white paper." Whenever pioneers browse these materials, they can submit comments on specific sections, ask questions, and make suggestions.

Offline Pioneer meetups.

Maybe they have done this several times in the past. I am not sure which countries they have held these meetups in.

The Pi network has something called "liquid democracy."

In liquid democracy, each pioneer can vote directly on an issue, or he can delegate his vote to another member of the Pi network.

So that's Phase 1: Provisional Governance

Let's go to Phase 2—Constitutional Convention

I assume since Pi's user base on July 12, 2021, already hit 21M, the network has already transitioned to this phase since then.

Under this phase, there is a so-called "provisional committee." This committee is responsible for soliciting and giving suggestions from and to the wider community. They are also responsible for organizing online and offline conversations so that Pi members can study the long-term constitution. Pi's plan is to hold this constitutional convention in different parts of the world, given the fact of its global user base.

Since December 2021, I haven’t heard if there was any development related to this. The world was under a pandemic at that time, and holding such a convention was impossible.

Furthermore, except for the offline or face-to-face hosting of the convention, Pi will also use the mobile app as a platform so that members can participate remotely. So "whether in-person or online, Pi's community members will have the ability to participate in the crafting of Pi's long-term governance structure."

The Future of Pi Network Governance

Now that the Pi network is already in the open mainnet, I expect that it has a life of its own and should be fully decentralized. This is how I understand the whitepaper about the Pi network’s governance. I am not sure how this will work out in reality.

If you are curious about Pi Network, you can download the app by following this link. You also need to have a Bitget account where you can transfer your Pi from your Pi wallet to a crypto exchange and exchange it for your currency.