Coin holder voting, both for governance of technical features, and for more extensive use cases like deciding who runs validator nodes and who receives money from development bounty funds, is unfortunately continuing to be popular, and so it seems worthwhile for me to write another post explaining why I (and Vlad Zamfir and others) do not consider it wise for Ethereum (or really, any base-layer blockchain) to start adopting these kinds of mechanisms in a tightly coupled form in any significant way.I wrote about the issues with tightly coupled voting in a blog post last year, that focused on theoretical issues as well as focusing on some practical issues experienced by voting systems over the previous two years. Now, the latest scandal in DPOS land seems to be substantially worse. Because the delegate rewards in EOS are now so high (5% annual inflation, about $400m per year), the competition on who gets to run nodes has essentially become yet another frontier of US-China geopolitical economic warfare.
Research Notes
Engineering Security Through Coordination Problems
This is the essence of engineering decentralized instutitions: it is about strategically using coordination problems to ensure that systems continue to satisfy certain desired properties.
A Call for a Temporary Moratorium on The DAO
We just released the first draft of a research paper that analyzed The DAO and its voting mechanism. This paper identifies problems with The DAO’s mechanism design that incentivize investors to behave strategically; that is, at odds with truthful voting on their preferences. We then outline potential attacks against The DAO made possible by these behaviors.In particular, we have identified seven causes for concern that can cause DAO participants to engage in strategic behaviors. Some of these behaviors can cause honest DAO investors to have their investments hijacked or committed to proposals against their interest and intent.
Notes on Blockchain Governance
In which I argue that “tightly coupled” on-chain voting is overrated, the status quo of “informal governance” as practiced by Bitcoin, Bitcoin Cash, Ethereum, Zcash and similar systems is much less bad than commonly thought, that people who think that the purpose of blockchains is to completely expunge soft mushy human intuitions and feelings in favor of completely algorithmic governance (emphasis on “completely”) are absolutely crazy, and loosely coupled voting as done by Carbonvotes and similar systems is underrated, as well as describe what framework should be used when thinking about blockchain governance in the first place.
Source: Notes on Blockchain Governance
Bitmain Nears 51% of Bitcoin’s Network Hashrate
Bitcoin’s mining hardware (hashrate) has tripled since December, as can be seen above, even while price has fallen by 3x since December.It is now therefore a lot more expensive to mine a bitcoin than in December, while at the same time one mined bitcoin is worth a lot less.At some point miners are unable to afford energy costs or to keep up with adding more and more hardware as their old one becomes useless due to the constant increase of hashrate difficulty. So they close shop.Some miners, however, like Bitman, have lower costs, presumably because they manufacture themselves the mining hardware.So as other miners struggle, like Bitfury which has now dropped to 2%, Bitmain starts gaining more and more hashrate to the point they are now nearing 51%.The above bitcoin hashrate chart, however, even in a common sense way, looks quite unusual because it rarely goes down, if ever.Rather than responding to the price action, the hashrate appears completely detached. A situation that can not go for much longer because that increased new hardware itself puts pressure on price as the new barely profitable miners need to sell everything to cover costs.
Bitnation opens a new governance research unit in Amsterdam | BitNovosti English
The Blockchain: Free-Riding for the Commons From Potential Tragedy to Real Comedy
Is the blockchain an instance of commoning in cyberspace or is it enhancing capitalism to automate labour? Louis Volont and Walter van Andel argue that the blockchain is particularly well-suited to explore ideology and counter-ideology in the realm of the commons, for the blockchain constitutes a contested kind of commons: a market common, a monetary common, a kind of common that facilitates the accumulation of exchange value for, indeed, self-interested individuals. Could common ownership of that which is automated prevent the blockchain from a relapse into corporate tragedy?
Source: open! | Platform for Art, Culture and the Public Domain
Data Governance in the Digital Age | Centre for International Governance Innovation
Data is being hailed as “the new oil.” The analogy seems appropriate given the growing amount of data being collected, and the advances made in its gathering, storage, manipulation and use for commercial, social and political purposes.Big data and its application in artificial intelligence, for example, promises to transform the way we live and work — and will generate considerable wealth in the process. But data’s transformative nature also raises important questions around how the benefits are shared, privacy, public security, openness and democracy, and the institutions that will govern the data revolution.The delicate interplay between these considerations means that they have to be treated jointly, and at every level of the governance process, from local communities to the international arena. This series of essays by leading scholars and practitioners, which is also published as a special report, will explore topics including the rationale for a data strategy, the role of a data strategy for Canadian industries, and policy considerations for domestic and international data governance.
Source: Data Governance in the Digital Age | Centre for International Governance Innovation
The Blockchain: A Love Story—And a Horror Story
Is a ‘smart contract’ really a smart idea? Insights from a legal perspective – ScienceDirect
Swift developments in the emerging field of blockchain technology have facilitated the birth of ‘smart contracts’: computerised transaction protocols which autonomously execute the terms of a contract. Smart contracts are disintermediated and generally transparent in nature, offering the promise of increased commercial efficiency, lower transaction and legal costs, and anonymous transacting. The business world is actively investigating the use of blockchain technology for various commercial purposes. Whilst questions surround the security and reliability of this technology, and the negative impact it may have upon traditional intermediaries, there are equally significant concerns that smart contracts will encounter considerable difficulty adapting to current legal frameworks regulating contracts across jurisdictions. This article considers the potential issues with legal and practical enforceability that arise from the use of smart contracts within both civil and common law jurisdictions.
Source: Is a ‘smart contract’ really a smart idea? Insights from a legal perspective – ScienceDirect