In this talk, I'm referring solely to Layer 1 governance unless stated otherwise. Without layer 1 governance, there is no layer 2 governance.
In any system, the key fundamental properties of layer 1 are to protect users' vital data. Vital data consists of token balances, account/community/supporter names & lists, etc. It's there to make sure you can't A. Get Justin Sun'd (token balances forked out) B. To not have your free speech censored, I consider everything from a value transfer (a BTC transfer, for ex.) to, of course, the very words I write and speak. Everything else can be pushed to layer 2's, where it takes the strain off the main chain, makes it cheaper to run and more scaleable, thus more censorship-resistant.
"Moving beyond coin voting governance" - I'll explain why skin in the game, stake based systems are the core foundation needed for any "CrGov" (censorship resistance governance.) "DeGov" is vague as decentralization in itself isn't the goal, just like fire it itself is never the goal. You only want enough decentralization to achieve censorship resistance, just as you only want enough fire to harness its warmth. You don't want decentralization to the point you're in an abyss, and nothing can get done, and you don't want fire to the point it's burning down your house. So I think the term decentralization has been misused to the point that it has no valuable meaning anymore; it's better to state the actual goal of decentralization.
CrGov requires skin in the game for a multitude of reasons that will be laid out below. That does not mean coin-voting-gov is the end-all-be-all, and there are parameters we can add such as time locks for code changes, time locks on newly staked tokens combined with long time locks to vote (to defeat exchange attacks) a combination can work. I will get into the ideas for improvement at the end of this discussion. But when it comes to achieving CrGov, there can't be any form of KYC, 1P1V, or anything of that sort- That is strictly for layer 2's. Skin in the game is the de facto go-to when aligning incentives (human greed) with network security.
Funding public goods: how do projects that are valuable to a wide and unselective group of people in the community, but often do not have a business model (e.g., layer-1 and layer-2 protocol research, client development, documentation...), get funded? - Vitalik Buterin
This was a big question on Steem if we were to fork, who would foot the bill? Would enough people be willing to run nodes and provide infrastructure with no guarantee of being compensated? Hive was not born at the time, so the unknowns were large, and Steem was no small system. Hive's technology is robust, with many moving parts and not something one person or even a small group can run sustainably in a decentralized way; it takes a incentivized community effort.
It's easy to get funding in a centralized way, via a premine token sale or raises from inside venture capitalists. However, the true magic is helping in getting started a self-sustaining network from the ground up without doing a funding raise. Here I will attempt to explain how this can theoretically be achieved and how it has played out in practice thus far.
To understand why it's so hard to get a censorship-resistant blockchain is the chicken and the egg situation. Layer 1 & 2 are very different. If we're talking layer 1 security, it's not an easy challenge, but for layer 2, it's much more plausible. Of course, you can't have layer 2 gov without CrGov on layer 1. Layer 1 must be in its own category. Who pays for it? If no one pays for it, it's never born.
Pretty much every human has the mindset of, "if I pay for something and put time and money into building it, I'm getting paid!" - And rightfully so, that is how humans are built. No one wants to work their ass off, build something open source, and give it away just so a bunch of "freeloaders" can come along and use the technology, copy fork modify, do whatever they want, all for free. Surely they will go broke quickly doing that?! What kind of psycho spends time and money and just gives it all away for free? - Web 3 breaks these old mindsets; some people have to realize things change, and just because on web 2 you could build something and hoard a bunch for yourself at the start does not mean it will be that easy forever. Life moves on you, and sometimes you'll have to do 10x the work just to get the same amount as you did in the "good old days." some haven't adapted to this, still cling to their greed, and need to retain premines. These people will eventually be surpassed by the 10x to 1'ers.
There will be a massive shift, as even the greediest of humans will eventually capitulate and act in their true best interest. Web 3 is beautiful because it changes that old mindset of thinking "I build it, pay me, or I keep a premine, etc." into, "I build this, I'm an early adopter, so I can just work and compete with everyone else to get a stake in this new network," - the 10x to 1'er. You'll still end up well if the project you build does well even though you didn't hoard a bunch at the start, just as early bitcoiners became wealthy without the need to premine Bitcoins themselves.
The very reason CrChain will be valuable is because you didn't mint a bunch of tokens for yourself at the start, creating unnecessary centralization. The premine and short time frame ICO's we have seen have not really been attacked in the way Hive was, and we will see the inherent flaws in such a token model as we become more mainstream. There is no need for a premine; it is, in fact, overkill. The creators already have a huge edge because they know their creation, know the launch date, get prepared ahead of time, just compete fairly vs. everyone else if you believe in your work. You'll create a much healthier network in the process. You'll get a smaller piece of a much bigger pie.
Web 2 & 3 collided in a big way, and we have seen the stench of web2 embedded deep into crypto thus far, the old mindsets, the old ways of doing things. What you'll find is, once you build something, compete on a level playing field with everyone else, others will get skin in the game on the system you built and treat it as if they built it - work effort-wise, moving full time into helping the project you built to succeed. There are certainly full-time "Bitcoiners" out there who did not even know Satoshi nor get an unfair incentive vs. the community to work full time. They see it the same as when a giant tree first bears fruits for all-knowing more will come later if they keep the tree nurtured. However, without first seeing the fruits, it takes the wisest of people to put in the work of planting the tree, in hunger and patiently waiting for it to grow.
In the end, you need people willing to put in more work than others without being compensated by the investor class. Just as we had the "Costco internets" of old that ultimately failed and the biggest underdog of them won, leading to the internet, we know today. You could sue Costco internet, you can't sue the internet, and this is the distinct difference that will be obvious in the years to come. -
Once you have achieved some level of CrGov onchain, the community can pick themselves up by the bootstraps by forming a DAO. In this DAO, people can vote, and the DAO pays people providing value in an autonomous way. This is how you fund work needing to be done that does not have an inherent business model to sustain itself. Developers can earn and at least be compensated for work done if the community likes it. Hive has many examples of this; our DAO has footed the bill for core developers, non-profit infrastructure, new dapps, marketing, and much more. However, layer 1 is much different as you can't pay someone if you don't have a DAO, and you need to have a CrChain first before you can have a DAO. So who is going to build the CrChain for free and provide resources at the start for infrastructure, and who will join them voluntarily?
And to ask a centralized chain with a "DAO" to vote on funding a non-profit layer 1 CrChain "competitor" that brings no power or money to any centralized actors will likely result in a vote of no-confidence. The DAO must be born inside of an existing CrChain, to begin with, or corruption will set in early and centralize the chain surely.
I talk about decentralization in blockchains more in-depth here
The gist is unless we have another satoshi-like character, IE someone who creates revolutionary software then walks away and relinquishes all control to the community, we don't even have a foundation to work with if we're talking about a creator creating a new blockchain. Of course, there are community forks, but I'll get into that later. The satoshi idea is rare and harder to pull off now than when Satoshi first created Bitcoin. The quick reason is that back then, no one knew what Bitcoin was. The investor class was not perceived as valuable and could be passed around lowkey for several years, creating a tight nite community.
While Bitcoin does not have coin voting, it's ruled by hash power; the beginning network effect laid the foundation for miners to perceive value in mining the network. A lot did it for fun, to test it out, and we're not looking to seek profit but to learn what the crazy new technology was all about.
The same is true for Hive via its Proof of Brain (PoB) token distribution; tokens were "upvoted" far and wide because people got to "earn crypto by giving away crypto" for the first time ever. It created a viral frenzy, but in a good way, not a "VC buying up all the tokens" kinda way; it attracted people of all kinds from all over the globe and created an amazing network effect. This was before large venture funds dominated crypto. The vast majority that got tokens were content creators and charities, people in need, families from all over. Everyone has a story to share; thus, everyone is a content creator. It was a novel idea at the time, still is, and over the last 5 years has to lead to one of the best networks in existence.
To do that today, if ever discovered, the project would go "viral" and quickly be eaten up by the eagerly awaiting investor class, think Bitclout, etc. This is why it is important to have large long-term stakeholders who see the vision and a robust token distribution method where no one group gets all the newly minted coins. - IE only miners get coins from inflation and no one else.
You need to have a real solid, organic community that hodls the large portion of tokens, and the best way to do that is to let the token be passed around organically, "freely," and let the barrier to entry be free, IE I can do x to earn crypto instead of buying it. I believe those days are long past; you can't even give a jpeg away for free without speculators eating it up, let alone a revolutionary new system. That's why we must protect the flames of censorship resistant community-owned technologies that exist today, born from the spark of those who believe in the potential of web 3.
The network must incentivize reputation, long term holding and give a true feeling of community ownership. Combining social, reputation, and community spirit like on Hive, we really own this network; our voices are not just "listened to"; they are heard and respected because they have to be; our stake goes a long way and matters here. That's because there is no premine or centralized controller on Hive; there is no one group you can go knock on the door and say, "Hey, pass this change on, force it to be put in" - no one has that power on Hive. When it comes down to it, that's very hard to say. How many blockchains that are coin voting have very large public doors that can be knocked on? How long until they are beaten down, and Defi becomes Cefi on most popular chains today? When the laser focus of governments is put on your chain, and they see any centralized pain points, they will be "regulated" relentlessly. The ones without pain points will be put in a different category and forge new laws.
We are far past relying on a satoshi-like figure to come out of the woodworks and save the day. We needed a scalable solution for web 3 free speech yesterday. All of the technology we could ever ask for is out there, open-sourced, and is built on. The crypto cycles have brought on an immense amount of innovation and capital; the ICO and Defi boom has led to some of the greatest technology, funded by billions of dollars going to some of the most talented developers globally.
In blockchains, the code is only as strong as the community that runs it, and the community is only as strong as its token distribution. The ultimate ace up the communities sleeve vs. centralized attacks is a community fork from a hostile money attack or premine. Virtually every layer 1 PoS network was born with a premine and ICO with quick token distribution to few people over a short period, and are all great candidates to be forked by their respective communities to remove the controlling premines. Read here for more info on community forks.
ICO's are terrible for token distribution because insiders can load up for very cheap, get "insider deals," and sit back once the competition starts with an insurmountable lead. No one knows who mines or earns what once competition begins; there are no KYC on PoS and PoW networks. So those that get a premine, plus an ICO, get such an insurmountable headstart because they also have the advantage of setting up miners/getting in PoS validators early and becoming the biggest miners of their own networks. You can't make that look good on paper, and you can't make it play out well in practice. It's good for a tokens price, sure, to have well-established people have the majority of your tokens, but it's terrible for censorship resistance. It's a game of musical chairs, and once the music stops, the only ones who won't have chairs will be those who don't have CrGov, and the market will act accordingly.
Thinking you can get the entire supply (minus small inflation) well distributed in a short period (less than a year) via ICO is where older layer 1's messed up. No one knows how long is best for a initial proper token distribution; however, I am very confident in saying it's much longer than one year. My belief is the token should start at zero supply. Everyone has a fair chance to obtain it at the start of distribution, and it's very slowly distributed over many, many years, eventually coming to either a cap or very low inflation paired with proper sinks.
Having a token sale that lasts a short period has so many downsides that stifle the ability for decentralization to flourish. First, less than 1% of the world knows about crypto now, way less know how to participate in an ICO, even less deal with the risk (both legal and potential scam) to invest. This means that the ones who buy ICO tokens are mainly insiders, people who are very deep into crypto to see potential in the underlining protocol. - The point is your distribution is going to a very, very small potential group of people if there is a short-term sale of any kind. Token distribution is in terms of decades, not months. You just can't rush how the token is released for the sake of a large capital raise if your goal is censorship resistance. Tokens distribution should be as future-proof as possible instead of being in the "right time & place" to buy tokens for dirt cheap in bulk, thus controlling most of the supply from the start. People on Hive can get Hive if they are witnesses, DAO workers, or via PoB.
With PoB, we have people on Hive who don't even know what an ICO is, have never used another crypto before, and just come here to enjoy the utility. That method of gaining tokens lasts forever on Hive, that distribution to ANYONE in the world, not just crypto-savvy insiders. - source
Having a short shotgun-style token release via sale, then allowing only one group of people to earn (miners in most cases) encourages centralized token distribution.
Those who are not afraid of the "lack of centralized funding" and brave the new world of seeking true censorship resistance will be the ones that change the world.
Hive's technology has many moving parts and can't be sustainably run in a censorship-resistant way without a community effort. One would need to sybil attack their own network to keep the "lights on" if they were to try and wield Hives tech singlehandedly. When the community forked, the weight of the impact from moving "totally" on our own was like a trampoline distributing the weight among many threads of resources; people from all over the world stepped up. This only happened due to the "attack" - all parties put disagreements aside, as the enemy of my enemy is my friend. The great alien invasion that would, in theory, unite all humans played out on a smaller scale on web 3, where an anarcho-capitalist community was attacked all on fronts by a "billionaire" yet managed to preserve its integrity.
So the "alien invasion" is the chicken before the egg, as until that happens, you'll have many smaller faction forks with various visions on how to conduct things, with very low survival rates. Under an actual attack, blindsided, people then come together and "divvy" up later. In this case, we used the ninjamined stake promised to the community as our Hive DAO, with inflation being divvied there for future, long-term sustaining decentralized funding. Since no one entity has control over the Hive DAO, the funds are only distributed to those voted in by the majority of the community. We have full-time blockchain developers who make a living off the Hive DAO; we have contractors, marketers, and ideas of all kinds being funded. We have seen amazing innovative proposals come out that have helped Hive immensely in all kinds of ways.
Security, scalability, feature-rich, and developer-friendly is all "real estate"; it's there to attract people to make apps on the protocol. This is the age-old question, without taxes, who would build the roads? Easy, private companies will do it and get paid by the people who need to use the roads. Pay for the road as you use it via a toll tax that goes to the maintainers of the road. People will pay because the road provides value for them. People will maintain the blockchain, get paid for doing so by people who want to use the blockchain.
Every protocol requires a spam filter; on Hive, that filter is resource credits. As the demand for resource credits rises, only one finite way to get them is accruing and powering up HIVE. This is the demand side and a natural sink. More sinks need to be added to any project to make sure the stock to flow is kept balance or deflationary.
Protocol maintenance and upgrades: how are upgrades to the protocol and regular maintenance and adjustment operations on parts of the protocol that are not long-term stable (e.g., lists of safe assets, price oracle sources, multi-party computation keyholders) agreed upon? - Vitalik Buterin
In an anarcho-capitalist way. There needs to be a community decision done by stakeholders in the system to agree upon the maintainers of the network and the code those maintainers run. This is why skin in the game matters. Communities of old would come together and make decisions; they had skin in the game because they lived within the community, and bad decisions would directly affect their quality of life. This means their vote could not be bought easily; they would all vote in favor of the best things for everyone. Slowly then, suddenly, that has changed and morphed into what we have today, where the skin in the game voters are essentially voting on 1 of 2 "mining pools," aka presidents. These are the people with the most connections, backing, and power, those who absorb all of the votes just like a BTC or PoS dominant mining pool would.
PoW/PoS is "Ghetto DPoS" explained here.
The free market prefers a much more centralized approach if left parameterless. DPOS adds parameters to force more decentralization inside the code itself, forcing a minimum of 20 validators over the free markets preferred handful.
On BTC or PoS, in the end, you won't get more than a handful of very large mining pools that run the network. It costs money to be a miner on PoS or PoW, and you must keep infrastructure up and running just to have your vote count; on PoS, if you mess up, you can be penalized and lose your stake. Bitcoin PoW has become so competitive that small miners are lucky to earn any block rewards in their lifetimes; it becomes a unprofitable venture. So, as a small miner, you get no say and will earn no rewards and be penalized in resource cost for even trying to participate in securing the network. This means a small miner on a big PoS or PoW network is akin to a tree falling in the forest with no one around to hear it. The cost to be a PoS miner is out of most people's price range; for instance, 32 eth needed to be a validator on ETH 2 out of 99% of people's reach. Sure, the number can be adjusted, but there is still a decent sized barrier to have your voice independently heard and not needing to rely on a 3rd party to vote in governance. Therefore you must delegate your resources to larger mining pools. This is the same concept as DPOS. No matter what we do as humans, we consolidate into the most efficient ways, and you can only have 1 best, 1 second best, and 1 third best; the rest become irrelevant as time goes by as to who wants to be a part of the 4th best "team" when they can join the best one.
People will delegate their resources to the most reputable miners; that's how it always will be. The difference between PoS and PoW, where I'm a small miner, and I can't entirely agree with the large mining pool, my influence on the network once I break away is very small. However, on DPOS, you get a direct say with your votes, whereas it does not cost money to have your input. On DPoS, you simply buy and stake your tokens, vote for who you want, have no overhead, no recurring costs, the barrier to sustaining a vote is zero. That is much more effective than what PoS or DPoS can offer for governance voters.
You must have skin in the game governance. 1P1V, even with magic that makes it, so you don't KYC is a no-go. This will either turn into mob rule, or people with zero skin in the game can sell their votes for pennies profitably. The reward for selling one's vote has to be less than the reward for voting honestly. Long locks ups solve this on DPoS because validators are not paid nearly enough to bribe any large stakeholder who is locked in. Sure they can sell the keys to their account, but it still becomes a hot potato that someone has to end up with. The moment a vote buying witness enters the ranks of consensus validator, the chain's value would plummet, and whoever got left with the long lock up bag would suffer many great losses compared to the pennies they earned trying to sell their votes. This may come as a shock to most other chains, "how would they even know a validator bought votes in the first place?" - DPoS created a coopetition among all validators. The top 20 have a natural incentive to ensure that every other top 20 validators are doing their job correctly because they are being paid. If one validator fucks up, it could hurt the network, thus hurting their money flow. Validators outside of the top 20 are chomping at the bit to get in and would gladly expose any witnesses doing wrong, as others would vote the bad witness out and move everyone behind that witness up one spot closer to being in the top 20. When a community combines elected validators, long lockup, proof of brain distribution, and layer 1 social built in and emphasized, we now know all of the validators from their stories, history onchain the pseudonymous or doxed reputations they built over the years, hundreds of them. We know every moving part as it's all done in the public square, people cheering in newer witnesses trying to get them a seat at the table, watching and cheering as they slowly climb the ranks. Anyone coming to the Hive and thinking they can buy enough votes to get into consensus would be seen as a money attack, and we have proven we don't take kindly to attacks. See Social defense is a must for any chain
Everyone would immediately notice some random no-name witness who is openly buying votes, which would turn out very badly for everyone involved. Consensus has the ability to remove malicious witnesses, so to buy your way in, you would need 51% of the voting influence regardless, which is another money attack, and we've been through this already.
On DPoS, your reputation is the backbone of your ability to rise to the top ranks of validators. It all plays a factor on Hive, the social reputation, proof of brain token distribution, all prevent vote selling from being a thing. There is a reason vote selling is not a thing on Hive. Stake-based is the only solution as a foundation if we're talking security of base layer gov as it puts greed above all else and requires a money attack to take over in which we can always fork as a last resort.
Time locks for voting in governance are the backbone of making any voting system work; without them, exchanges or centralized token custodians will run your chain to earn validator rewards. They are not penalized if there are no lockups. The problem here is these people do not always have your best interest at heart, as it's not their crypto, so if the network is attacked, they don't lose funds, so they get all the reward with no risk. We have seen the three largest crypto exchanges in the world attack a public blockchain, using their customer's funds that lead to some of their customers having their funds forcibly removed from their sovereign crypto wallet. The unimaginable is the likely scenario nowadays, so you must be prepared for everything. It also makes attacks very easy and swift to leave and not face damages. You don't have vote-selling on Hive for a reason; it isn't because we are just a bunch of great people, it's because we are locked in, and great witnesses don't accept bribes. The only witnesses that accept bribes are the ones not good enough to be elected by merit. Since I'm locked in, the last thing I want is to sell my vote for next to nothing compared to the value I have locked, witnesses earn crumbs compared to large stakeholders, so it's not like you get a ton for selling your vote anyway. So I want the best in there, and we have had 5 years now with no vote-selling; I know every single witness in the top 30, and I know none of them have ever sold their votes for money. You cant do that about any other chain, and there are many reasons for that: social status on a social blockchain, long lockup, reputation to become validator on DPoS, etc.
Small groups of wealthy participants ("whales") are better at successfully executing decisions than large groups of small-holders. This is because of the tragedy of the commons among small-holders: each small-holder has only an insignificant influence on the outcome, so they have little incentive not to be lazy and vote. Even if there are rewards for voting, there is little incentive to research and think carefully about voting. - Vitalik Buterin
This is why the barrier to entry must be as "free" as possible, and voting has to cost zero recurring overhead (outside of initial stake bought) - In POS/POW, smaller "gov voters" must delegate to a pool. The only options they have are to delegate to the largest pools to get the best compensation rate. This model has vote-buying built-in by literally excluding every small validator, forcing them to delegate their vote to those with the most resources.
Mining pools "bribe" users all the time; that's all they do. They offer competitive rates to noncompetitive individuals who earn their small mining rigs and stake. The best way to avoid people being bribed is by having long lockups at stake as mentioned above. Long lockups mean whales prefer better witnesses over earning short-term gains. Imagine it takes 90 days (like on Hive) to fully unstake; if you have shitty witnesses by the time you fully unstake, the price could crash, netting you way less than the pennies you earned voting for trash witnesses. Since DPoS is split between 20 getting the highest rewards and Hive is so scaled in terms of not costing an arm and a leg to be a validator, this means the pay witnesses could realistically offer voters is quite small. There is zero chance a witness could profitably bribe a large hive stakeholder due to the long lockup. Furthermore, a hive witness going out trying to bribe smaller voters will be figured out quickly by their peers due to the vast amount of smaller voters needed to make a difference.
The secret sauce to Hive is PoB, where whales are forced (if they want to earn rewards) to "upvote" human contribution to the network. The amount a whale can "give away" for free vs. a malicious vote-buying witness is far greater. This means smaller stakeholders who sell gov votes to malicious witnesses will be exiled, never to be upvoted again, even likely downvoted on every future post. The absolute vast majority of smaller stake hodlers on Hive earned their stake via PoB. They have zero incentive to lose their reputation, their future PoB rewards, and to be attacked socially which will cause stress to anyone that interacts with them, is not worth selling their vote. There are so many things to consider when dealing with human psychology and Hive hits the main points from all angles.
Coin voting governance empowers coin holders and coin holder interests at the expense of other parts of the community: protocol communities are made up of diverse constituencies that have many different values, visions, and goals. Coin voting, however, only gives power to one constituency (coin holders, especially wealthy ones) and leads to over-valuing the goal of making the coin price go up even if that involves harmful rent extraction. - Vitalik Buterin
With a simplistic, mature, censorship-resistant base layer where token distribution is good, this becomes more of a community-driven consensus with the ability for smaller factions to branch off. For instance, Hive has PoB on the base layer; however, many people have various ways of changing PoB to make it better. The second layer allows experiment without concern of the base layer security; the second layer PoB communities are much more flexible in their strategies.
Making a very simple feature set that requires heavy-duty governance while giving communities ways to experiment, burden-free of concern for baselayer security, allows everyone to express themselves. Ultimately, the base layer needs to function, and it needs to function in a way where many people can participate and earn governance at the lowest possible barrier to entry. No matter what, "greed" incentives must align with the betterment of the platform as human nature is to do what is best for themselves/the community over the wellbeing of others. Still, as long as the best for you is also the best for me, we all strive towards a more censorship-resistant sustainable ecosystem. Greed is the bedrock that is where you start; from there, you figure out a way to align the communities goals with it.
Conflict of interest issues: giving voting power to one constituency (coin holders), and especially over-empowering wealthy actors in that constituency, risks over-exposure to the conflicts-of-interest within that particular elite (e.g., investment funds or holders that also hold tokens of other DeFi platforms that interact with the platform in question) - Vitalik Buterin
Another reason token distribution is key. "giving voting power to one constituency (coin holders)" - the better term would be to replace validators for coin holders. Coin holders need ultimate power; they are the voice of the network. This is why you can't have token rewards going to any one group but a vast variety of participants to not create oligarchs. To call coin holders "giving voting power to one constituency" is making them out to be some niche faction; coin holders are the network. You don't restrict coin holders voting powers to try and achieve balance; you make access to tokens much broader. You're basically creating a problem (centralized token distribution) and trying to fix it in every way that won't solve the underlining issue. If you have cancer, doing a bunch of things to improve the skin around the cancer isn't going to help much; you have to root out the cancer cells themselves, aka the premine centralized stake, then fix the output of token distribution so that it is never centralized again.
To be a part of any governance, you must have skin in the game. Without skin in the game, your opinion is irrelevant on the matters going inside that community. With this foundation known, the only defense is making sure no one group gets more tokens than the other. Just giving governance tokens to "miners" means you'll eventually create an oligarchy out of them. Miners, DAO participants, and people who contribute to the network in many ways must be considered. Starting from a place of good token distribution, no one party having anywhere close to enough needed to control the network (Hive, the largest holder, has less than 4%), and having a good equal distribution of future token inflation is the best you can do to maintain censorship resistance. The trouble it would take to buy or try and coerce multiple large stakeholders is not worth the trouble when the community can easily fork, and the stakeholders you collude with have their reputations destroyed.
Can crypto protocols are considered public goods if ownership is concentrated in the hands of a few whales? Colloquially, these market primitives are sometimes described as "public infrastructure," but if blockchains serve a "public" today, it is primarily one of decentralized finance. Fundamentally, these tokenholders share only one common object of concern: price. - Vitalik Buterin
"Can crypto protocols are considered public goods if ownership is concentrated in the hands of a few whales?"- No. No matter how hard you try, you cannot dance around centralized token distribution. Either you have good distribution, or you don't. Trying to put makeup on a premine and think of all kinds of ways to fix that via taking governance off chain is putting a band-aid on a broken arm. If you can't achieve balances token distribution now and sustain that into the future, there are zero fixes to solve that unless you move completely away from token voting, which I do not believe is a better model.
There should NEVER be a "few whales" who have total control over the network; if that is the case, you have already failed. Things do not decentralize over time; that is a fallacy; things only become more centralized over time. The same for censorship resistance, Bitcoin has only become harder to attack than when it first started. If you start on the right foot, you tend to stay on the right path because that is the value case. If you start on the wrong foot, it's easier to set aside censorship resistance for short term gains because you've already broken the first rule of token distribution. It's like trying only to eat one potato chip; it won't be long until you're eating the entire bag; why? Because you can, or someone can make you.
Ultimately no matter what, every blockchain relies on "price" due to the need to pay infrastructure providers. The way you achieve price is to make sure you have the fundamental in line, IE censorship resistance. For example, if BTC could easily be controlled and taken over, it wouldn't be very valuable, therefore to achieve: "price," the network must be decentralized and censorship-resistant.
Improvements brought up I agree with:
A: "A governance decision made at time T only takes effect at eg. T + 90 days. This allows users and applications that consider the decision unacceptable to move to another application (possibly a fork) - Vitalik Buterin"
- This is self explanatory, if we had this in place, the people who Justin Sun forked balanced from would have been able to fully power down. With this in place, the attacker can no longer stop the community from dumping the corrupted token and enriching the community that is forking away. Hive already has the 30-day weight for newly powered up stake, this is taking it a step further.
B: "Be more fork friendly. Set some emergency DAO funds that could be unlocked only for such reasons. The DAO emergency fund could be unlocked according to a snapshot of the hive voting stake taken a month ago.
For example, Justin Sun somehow takes over hive again. He now has a majority stake. We want to fork and unlock the emergency fund to sell as much hive as possible and use it for the next hard fork. To unlock the fund, we need approval from 17 old witnesses voted in a month before the takeover, and we need x% of the staked hive one month ago to approve the emergency unlock. This would be a significant disincentive for attackers, as they will get dumped on very heavily. Furthermore, they can't confiscate those funds, assuming we also implemented the fork delay, because they can't change the rules in a minute. - @marki99 source"
- This is a very unique idea that I think would work very well. Combined with effort A, you would be able to not only have the community fully dump their corrupted tokens, but now you also give extra firepower in the form of a large stash of tokens that can further enrich the community while making the attacker suffer. I think both, if 100% cleanly technically possible, will be a no brainer.
C: Proof of participation
- Hive already has this in the form of proof of brain. I believe this is a good token distribution model, and with the tokens earned the participants can stake them and vote on governance. So it accomplishes the same goal in effect that those who bring value will earn the ability to participate in governance. This is more elegant via token distribution giving them real permissionless governance say, and this is why it's important to have many ways to earn governance tokens to create a balanced distribution of a variety of different parties.
Ending comments:
Removing stake and going more off chain with governance has many attack vectors I did not even touch on. Creators are put on pedestals and have a large "blind following" because who would know better than the creator, right? This creates centralization in a lot of subtle ways. First, if you publically go against the creator, you risk being attacked by "the community," and it will be like pulling meat from a pitbulls mouth. Many will remain silent to avoid confrontation. Stake speaks for itself. Maybe I'm a large stakeholder in this no-coin governance, and I disagree with the creator and their following, sure I can fork, but that would split the community at best; at worse, I'll be forking to a minority chain, and I'll always be at odds vs. the "creator." - That is why it's always best if the creator leaves the project completely, IE Satoshi left at the beginning, Dan Larimer left at the beginning, etc. or remain anonymous and contribute via pseudonymous handles. The point of "decentralization" is to relinquish as much power as possible. Everyone's ideas and voice should be heard on equal merit. If you retain any kind of power in any way, you're doing a disservice to the ecosystem you're trying to create. Power always resides somewhere, the best place you can put it is in alignment with greed; therefore, you can always trust humans to act in their best interest; if the total of all interest is silenced by one all-powerful interest, the community can fork, which devastates the attacker's bottom line as the largest stakeholder now loses the majority of the community on the chain they are invested in. It's elegant, it works great on social DPoS chains, and it's already played out in practice amazingly well. No system is perfect; the best you can do is realize your weak spots and protect them with a counter, but trying to achieve no weak spots leads to tail chasing, too much theory over practice. You end up leaving a bigger weak spot than originally intended.