Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Bonus 2/2: Cosmos Validator Panel and Governance Debates – Interchain Conversations Berlin

Episode Date: June 21, 2019

This is part two of a two part bonus series. These sessions were recorded at the first Interchain Conversations conference which took place in Berlin on June 13th and 14th, 2019. The firs part of this bonus episode features the validator panel moderated by Brian Fabian Crain, Co-founder of Chorus One. The panel included Florian Liss of Staking Facilities, Hendrik Hofstadt of Certus One, Aurel Iancu of Dokia Capital, and Jun Soon Kim of stake.fish. The conversation goes into the role of validators beyond staking, ways in which we can avoid too much centralization, and how validators will differentiate in a market which tends towards homogeneity. The second part of this episode is a governance debate moderated by Sunny Aggarwal. The first topic is on plutocracy and features Jae Kwon and Rigel Rozanski. The second is about revokable governance and features Chris Goes and Jack Jampolin. Subscribe to Epicenter for new episodes every week.

Hi, welcome to Epicenter. My name is Sibes San Quichu. This week, we've got two bonus episodes for you, both of which were recorded at the Interchain Conversations conference organized by the Interchain Foundation and Cosmos. This event took place last week, June 13th and 14th, in Berlin. This is part two of the two-part bonus series, and if you haven't already, go back and listen to Part 1.

In the first part of this episode, we've got the Valiator panel, which was moderated by Brian. It was a really information-dense discussion about the Valiator ecosystem and some of the challenges that they face. So they talked about a bunch of things, including the role of validators in the ecosystem, which, by the way, goes way beyond just securing the network. Another interesting topic was how we can keep validation decentralized

and some of the things that validators are doing collectively to avoid too much centralization. Anyway, it's a fascinating discussion, and Brian did a great job at moderating it, so I hope you'll find it informative and enlightening. In the second part of this episode, we've got a wonderful session moderated by Sunny. Sonny actually dressed up as a Byzantine general for this session,

and he brought people on stage to debate topics related to governance, and it was fascinating to watch. At one point, Chris Goes and Jackson Poland of the Cosmos team go into this debate about revocable dictatorships, and Chris takes the position that Cosmos allows for, quote-unquote, safe dictatorships. It was amazing. There's some real gems in this one. I hope you'll like it.

So with that, here's the Cosmos evaluator panel. Thanks so much for organizing this, first of all. exciting. I, you know, have been sort of vaguely involved in tendermint for many years and in Cosmos now for two and a half years. And it's awesome for the first time that like so many people come together. So hopefully next year we'll have another one of those, but with, you know, 600 people or much bigger scale. So yeah, thanks so much for organizing this. And yeah, I'm really excited today that we have, you know, a bunch of our validators to talk a little bit about Cosmos and about the role of validators and the evolution of the network so far.

So maybe let's get started here. Maybe we can just go around. Everybody can briefly introduce themselves their company and like why and how they ended up becoming a Cosmos validator. Do you want to go ahead? Hi, I'm Florian. I'm from Staking Facilities. We're yeah, stacking as a service provider from Munich, Germany. We came to Cosmos about like a little bit more in a year ago when we looked at the ecosystem and looked what's available and I think that Cosmos from the beginning had a very clear definition of how staking will look like. And yeah, we liked it, so we started working on it. Great.

I'm Henrik, co-founder of Sergis I and we are also staking as a service provider focused on security and compliance. And we got into Cosmos in the middle of the middle of the first. of last year, looking at a few platforms to build decentralized applications on top of, and I started bashing on the tenement code looking for bugs, and that's how we kind of got into it. I'm J.K. I'm the operations manager at Biffish. Biffish, since the exception has sort of changed into a more bigger scope project, so we decided to put all of our staking validator business under stakedoffish.

why I have the staked office shirt out here. We got our feet into validation because our founder, Wang Chun, who he believed that the proof of stake is coming in a big way. And Cosmos was one of the chains that had a carefully thought out system. And it was one of the few that we thought would be worth one of the earliest to market.

And so that's why we decided to validate our cosmos. Hi, so this is Oro from Doca Capital. Thank you for having me. We're coming from a proof of work industry and we started researching proof of stake networks that were going to launch soon and we decided to teach the whole proof of work operation that we're doing back then and we're fully migrated to proof of stake now. want to do a good job. Cool, awesome. And yeah, just speak about myself. So I used to be part of the tenement team.

So I was the kind of first non-developer there and the COO at one point. And then felt that was the end of 2017 that, yeah, this whole, you had this design in the white paper and there's going to be these validators and they have this like important function in the network and it felt like nobody was working on it. So we started working on it back then. And of course, in the meantime, lots of people working on it. So there's a change in an incredibly fast pace. But so I think several of you mentioned that what appealed to you guys about Cosmos

was that there was kind of a clear description, a clear view of staking and how it work and the role of the validators. How do you guys see the role of the validators, maybe both in Cosmos, but also in proof of stake in general. I don't know, Florian, do you want to go ahead? Yeah, sure. So on one hand, we have the actual work that we do as a validator, is validating the blocks, obviously.

But I think it goes further beyond. Like, we have a role of, like, educating people about proposals, for example. Like, what impact do we have on the chain? Actually, I think it's way bigger than just running it. but like the whole ecosystem relies on strong validators. And I think you can see that in Cosmos, Cosmos is so great right now because we have a very strong community, like all around the world, we have a very strong Korean community, Thai, German, American, Canadian.

Romania, of course, yeah. So I think the responsibility is way bigger than just the technical service that we provide. I would strongly agree with that. I think as validators, we're also ambassadors and developers. Most of us validators have contributed in many different ways. It can be just a guide that was published. It can be a dashboard for staking, block explorer, bug reports and all of this work on the protocol itself and spreading the message about the protocol itself. So I think that's also something we all feel strongly about. And the fact that we validate on different chains also provides a lot of value because we're able to see,

Proof a stake itself is still so early on. There's a lot of parameters that needs to be hashed out. There's a lot of, there's a lot of experimentation that needs to happen. And we as validators on multiple chains are able to then provide these knowledge that we accrue from other chains into, like, for example, Cosmos and vice versa, where we see a lot of good parameters in Cosmos, and we try to take that knowledge out to other chains. I think there's a lot of value in that as well. So a lot of new chains, I think there's a kind of trend in the proof of state chains with this idea of like you want like more validators and more nodes, right?

And like the bigger the number, the better. And, you know, you have things like Algarand and DFINITY and, you know, PolkaDOT as well to some extent. What are you thoughts on this and the kind of like pros and cons of that? you know a tendency like maybe or else do you want to I think the biggest issue for the coming take networks will be taking token distribution and choosing a right validator set and also the number of validators that are validating that specific change so there's going to be a adventure anybody else want to comment

on this yeah I I think that there's chains that are just targeting totally different audiences. I would say there's Cosmos-like chains that are looking for validator sets of highly professional validators, but then just a few of them, because there are just a few of them. And I think we can find a concentration of the highest-quality validators on the Cosmos hub,

and we've seen that pattern that, newly launching chains, that wanted to be like Cosmos, reach out to Cosmos validators, because that's where they can find technical excellence and quality overall. But obviously we also have other chains that are just aiming for huge decentralization with thousands of nodes. And I think they have totally different requirements. But I think that especially these chains with fewer validators, but higher quality can often perform better and move faster than the others. Yeah, I would also add that what you said, like the quality of validators that is available is, like there's not that big of a set of validators who actually know what they're doing. so I think that some of the smaller validators will realize soon that it's not affordable to them to run a really secure network

and therefore I think chains that want to have like 200 really professional validators they will struggle a lot to actually find them because there aren't just that many on the market yeah I mean one thing that I think a lot about in this context is you know what does a market look like naturally. Like, is there, where's a market where you have like 100 participants with the same market chair doesn't really exist anywhere? So if you have the idea that there's going to be like 100 validators and they all have the same size, that just doesn't seem stable, right?

Like, something is, someone is going to try to aggregate it somehow. And then, you know, it feels, for example, the logical thing to happen if you say you're going to have a lot of validators and economically incentivize such that, you know, you know, you know, let's say everyone gets paid the same, well, of course you want to run many validators, right? So then maybe you'll have some that do it as a service. And so I think it would be very interesting to see that play out, where maybe on the one hand you have people trying design system

that explicitly try to prevent, you know, people forming larger businesses and then how people try to route around it. I think just one thing to add there is that I don't think I personally don't think decentralization should be considered by the validators' network power. I truly believe that decentralization should be measured through the token distribution. Because, for example, on Cosmos, anyone could redelegate instantaneously. So if you act maliciously or if you're down for too long that a staker feels uncomfortable, they could easily redelegate and suddenly the entire ranking for the Cosmos network would look entirely different.

And so I think networks should really think about token distribution a lot, a fair distribution a lot more than thinking about, like, oh, how can we like entirely prevent a validator from occurring too much power? Of course, there's a threshold where, you know, you need to absolutely stop, yes, but, you know, I think token distribution should be considered of more higher priority. Yeah, that's actually a great topic to bring up in something that's already been discussed various times. and in many forums is the kind of topic of decentralization. What exactly does that mean? What's the right level of decentralization? When it's validated too big? Any thoughts on that debate and opinions? I'm pretty biased here, so I...

Oh, I am like, you're like, don't worry about valid a size, token distribution. Right. That only helps, thank you, Sonny. So just to point out, not enough to hold the chain. Or just barely. Well, there's 37% of watching power up here, but we don't control it, right? So people, if I say something wrong right now, if I say Cosmos is stupid,

then it would suddenly be probably like 30. Whoops. And I think that's a big part of the decentralization is that many people can make the choices. Like it's us maintaining the whole thing, but many people have the possibility to decide who's actually sitting here and I think that's really important. Actually, and I think decentralization is not just about

the power of validators, as you mentioned before, but it's also about just how these validators operate. Because if they're all hosted in AWS, then we're all in trouble because once Amazon decides that staking is not a business they want in the platform, the chain will halt.

And it's also a lot about geographic distribution of the whole network, meaning not just notes, but also legislations where the validator companies are actually located in. Or suddenly Google goes down. Or Google going down, and validators suddenly stopping, which may or may not have happened. Yeah, I thought they would have as infrastructure very for that, right? I don't know. Yeah, and on that point, I just remember there was, you know, Cosmos is only like a few months old now, but I remember there was a, that was not so long ago, but there was a picture of a panel in Hong Kong.

where you had like 80% of the Bitcoin hash rate on the panel. So it's a lot better with 32% here. So another topic that has been discussed a lot is the question of the kind of economic sustainability and model for validators. Yeah, what are your thoughts on that? Like, how do you guys think this is going to play out in the next year?

I am in the camp that thinks that the current layout of the land right now is going to look entirely different six months from now, namely because there will be a lot more exchanges, custody services, and funds, namely, who will launch their own validator service.

And when they do, some of these services will think of staking as a future of their product and their main revenue sources from their product, not from staking. And so, you know, they really don't need the revenue from staking and will likely charge probably low fees. So, you know, once these guys entered,

the entire market is going to look fully different. And that's what, at least, we're preparing for, those entrants. Do you think this is a threat? I don't think it's a threat because they have no incentive to act maliciously, right? And, like, arguably, they might even, they probably have their own data centers,

so they might have pretty good infrastructure team to support the network. I don't think it's namely a bad thing, but it could harm the independent validators. That's the threat, potentially. I would say you need to find a niche for you if you're not that big, so you need to find things that you can provide to the network that they can. So, for example, building tools around staking, where they maybe have an advantage because they already have the user base.

If you look at the giant exchange, they have all of that taken care of. But I think there's parts of the system where as a small company, you can act way faster and way more in the interest of the users. And I think that's exactly where you need to be. I also think there's...

From our perspective, there's mostly going to be three to four categories of validators. Like first category being exactly the custodians exchanges, funds you mentioned. Second category being community validators. actual validators providing something to the general community, as we've seen quite a few at the moment that just build tools, contribute to the project, maybe even get grants from the foundations, and build something and help grow the ecosystem, or even build a project based on Cosmos SDK and add up tokens, like providing additional benefits to the delegators. I think this is going to be something where they can provide added value compared to these other actors. And the third, probably not as relevant. for Cosmos, but for potentially a few other chains, just individuals, people that want to

run a validator from the basement, something like this. I think that's the kind of categories that we're going to see, and you have to provide an added value, really, to stand out in this field. So let's say we do end up in a space where, because, yeah, like you pointed out, maybe exchanges, maybe some other players come in and they don't be, you know, validation is not their business, right? They have another business and, you know, like an exchange, a good example, right? And exchange doesn't really care about any particular network, right? They just want to have trading volume and the fees, as long as they're trading whatever coin, they're fine, right? Is that a problem if you have, you know, stakeholders or, you know, people controlling a lot of

of voting power, you know, that don't have any particular, like, no deep interest or ties with the network itself? I mean, these exchanges directly might not, but the customers of these exchanges do. And if they see that the token they bought, especially larger holders that are well informed about the project itself and the state of the project, that they will have to carry on the interest of the customer and do their best to help this system and provide. good services as a validator. And I might even see that

if exchange grows extremely large, they will have to delegate to a handpicked set of validators. Obviously, there's risks involved, like slashing, but I think track record will allow them to, like just looking at the track record of validators,

will allow them to pick a few to spread this too. I'm not sure whether this is the optimal way. Obviously, this restricts the delegation to just a subset of the validators, but at some point they will have to give away that power, I think. I think what we have to think about is like, it's not only that exchanges list tokens and start staking on them,

at one point they will start delisting stuff because it's not, they don't get enough reward from it, or there's like bad press about it. And we have seen it many times of crypto that the market is going up and the market is going down. And that's where I see the problems could arise if the market goes that down, that they stopped delisting it, and you suddenly lose, let's say, 37% of your voting power on the network.

Like, if validators go away because their main business model isn't any more interested in this coin. Likely, the exchanges and custody services have a lot more at stake. They're probably going to put in a lot of their own, because they'll probably have custody of the funds, right? At least a big portion of it, of whatever stake they get. I think they'll make sure to not get slashed. So in a sense, I think they do provide value in that they're providing, probably going to provide really good infrastructure. And also to the community side, too, because if they're passing along a lot of the rewards, the rewards to their community members, like arguably that's good for the Cosmos coin holders.

But I think we just need to depend less on some of the block rewards. for some of the community projects. I think that's the purpose of the community fund. We should try to deploy it and make better use of it. And there's a reason why we have grant programs as well. We need to really start activating these so that the project teams are less dependent on the block awards and more dependent on some of these grants

that would give them more freedom. So the Cosmos Network launched, right? And there was a whole lot of parameters set, right, from like inflation to the number of validators to like how quickly the block reward changes. How do you guys feel those parameters have been chosen and do you think at this point that any of them should be changed? I don't know, maybe...

I don't know if it gets decided on next government's proposals to have a larger validator set, maybe that would affect block times. Correct me if I'm wrong. So maybe block times should be taken into account. So you think potentially larger validatorset and sort of being okay with having a slightly worse, maybe slightly worse performance and I guess slightly bigger blocks because of more. Yeah, yeah, but we're still in the early days.

Three months old baby blockchain. I would say we have to be a little bit more patient. I mean, Cosmos is so new, and it has been a smooth ride in Mainnet so far. So I would say, like, we need to figure it out before we change every, like, a few months, everything. So what I would say is rather take it slow. It's the same with, like, network upgrades. I hate the fact that we throw away the old chain and just start a new one every time, sorry. And then there's the fact that we say basically, yeah, we're responsible to store the

data somewhere, but there's no incentive to do so. So if we break away and in 10 years someone says like, wait, what was going on in Cosmosub 1? Like who will have the data? Who is responsible to provide it? I think that's more the things we should think about right now than rather than what's the block time. Is it six or seven seconds?

I think that's not important, especially since we only have transactions right now. We don't have an IBC ready or something like that, so it's just transactions. Hendrik, what about you? What parameters do we change? Which parameters do we change? The great thing is that soon we'll be able to change parameters as we just decided to activate the change parameter messages, which is a great thing in itself and proves governance works. But I think we once had a call shortly after long. where we all discussed, I mean, even an open call, where we discussed exactly this thing.

And some people, including me, raised concerns about slashing being very low. But actually having looked at the network at the moment, I think they've been set to just to write values. I think 5% slashing for double signature is okay at the current state of maturity of the chain. What I'm still a bit concerned about is just lifeness slashing, so being allowed to lose 95% of blocks. A risk-averse actor might even think, hey, come on, I can shut down a validator for 60% of the time and not risked double-signing in that time, and I will not be disincentivized

except for, of course, block rewards. I think Chris Goes once opened an issue and proposed an interesting way on very granular slashing for downtime and a very interesting incentivization layer. And I think that's something might want to look at, but I'm fully on the side. that we've got more important issues to think about at the moment, one of them and the largest of them being how to make Cosmos Hub useful and how to give Cosmos Hub a unique selling point, except for the validator set so it can sustain a long time and thrive.

Yeah, let's dive into that topic. So what's the most important things that we can do in the near future to make the Cosmos Hop more useful, more powerful? I really think education plays a very big role in governance, mostly. So if we see this scenario where Polonics, let's say, gets a decent chunk of the voting power, their delegators should know that in a governance scenario, their vote can be overwritten and they can vote whatever they choose to.

instead of letting the exchange decide for them. Yeah, although Polonix probably doesn't let you override their vote, presumably, no? I don't know. It would be pretty bad to see such a big player gathering a lot of delegation and just deciding stuff in a governance scenario. Sure, sure. I think, as I mentioned, probably one of the most attractive properties of the Cosmosub is just the fact that it has all of these great validators and this really solid validator set. I think that's something we can make immediate use of once we have IBC, of course. I think education is super important.

I think this event itself is like a great step towards a better education and bringing us all together and into discussions. But it's also things like shared security that we can explore to make use of this. super solid validator set to allow other side chains and zones than to make use of this, because spinning up a chain is extremely painful, and the process of getting the validator set incentivizing them properly is really painful. And that's one pain we have to take away from them to allow this ecosystem to thrive and exist at all. I would add user experience.

I think, like, especially in the early days of the main net, like, there was some so many questions from people because they didn't understand how the CLI works. Just that we didn't have an audited wallet at Maynard start was really hard for people. So we really fast saw that validators again went really creative and found different ways to solve this issue. And I think that's also part of the future. We should always innovate and just make cool gadgets around the Cosmos SDK that just makes it attractive for everyone to use it, even if you don't know how it works in the

in the core. Yeah, Hendrik beat me too, but I was going to say, yeah, helping zones, you know, spin up. It's challenging. And, I mean, for us, even, we're really trying to think of what will be the best way to help them. But the incentive is a bit tricky there. And so I think there's a lot more to discuss.

And then second was probably get more of the community to stake. I know we have a pretty high staking ratio, but, you know, we could still do better. you know, we could still increase the staking rate and potentially then that would arguably help with decentralization because we could incentivize the, because these people might want to, you know, try to explore other validators and through education we could direct them to actually decentralize and diversify their delegations. Yeah, so just briefly on the kind of like shared security launching zone thing, that we put a topic on the on conference thing,

so that's tomorrow afternoon. So in case anybody wants to discuss that, please join. What do you guys see as the role of the cosmos hub in the cosmos network and ecosystem, you know, in the long run, let's say three years from now, what's that going to look like?

And how are we going to think of the cosmos hub? Is the Cosmos Hop going to be what it is today, one blockchain, or is it going to be a blockchain with, I don't know, decks on it, or is the Cosmos Hop kind of going to include Bitcoin Peg, Ethereum Peg, a bunch of other, maybe core utilities? Anyone have a thesis on that? It's a hard question, but I was talking yesterday with Felix from Coroswain about that. And I think what's really interesting is that if we look at crypto today, everything flows around money, right?

So we also see the decentralized finance with Ethereum and stuff like that. And I think that in the middle of every good system is the money. So I think like the Cosmosub will provide liquidity for all of those zones. So I could imagine it having like a stable coin on it or something like that, which all the zones around it share. Other than that, I hope it's it will stay pretty much in the same vision that we have right now. I don't think there should be any applications built on the hub itself, but I think that's what we will have the IBC for. I think a lot of it will depend on how the final IBC spec actually looks like

and what the first zones are going to be like and how development goes there. especially also how exchanges and custodians will play the game, and whether these unique properties that the Cosmos Hub has at the moment being decentralization proper and solid validators set, whether that's going to stay or whether validators are going to migrate to other hubs, and that's not going to be a unique property anymore. I think it's going to depend on a lot of factors that are so hard to predict at the moment. Yeah, I'm not going to speculate because even Ethereum and Bitcoin,

which both started as experiments. The narrative has changed drastically over time. I expect something similar for Cosmos. But I just think what's important is try to get as many people to build on top of it and to really try to improve it. I think that's the most important part because at the end of the day, it's all about the community, the developer community.

So as long as we get that going, five years from now I see it as something unique, something that companies really adopt adoption, you know, real apps that could be usable, you know, being built on. Yeah, I'll sort of answer that question to a little bit, and I guess it sort of alludes to the way I phrased it, right, is that I think, you know, if you look at the cosmos hub today, right, you already have, you know, a very large, like an extremely high level of economic security, right, with like a market cap of 1.3 billion or something like that, and a lot of that being staked.

So in some way it would make a lot of sense to use that to kind of guarantee some core functionalities and utilities of kind of this larger internet of blockchains. So I think if you think of some, you know, a bunch of particular stuff that, you know, is really important to have. And I would think, for example, like maybe Bitcoin and Etherpeg, like these complicated peg zones to proof of work chains could be one thing. Yeah, a stable coin could be a good idea, right? Maybe that would be part of it, maybe decks.

So I think it might make sense, right? To have basically the same validator set and atoms securing directly. You know, maybe in the future it would be mandatory, right? You become a cosmic valetor in the hub, and you have to validate those five chains in exactly the same validator set and the same security. So that at least seems to be one path that I could say you play out.

I sort of disagree with that. I do think the beauty of cosmos is sovereignty and the fact that you have the choice. And so that could be one choice, but I do truly believe that, you know, the zones or hubs, they should have the choice not to do so as well. Yeah, of course.

I'm not saying, like, you'll have to do it. And especially application-specific zones and stuff, like they would have their own validator set, I think in general. But more like if, you know, have like, let's say, decks would be something that shared across, you know,

all kinds of blockchains or, like, you know, Ethereum pick. It doesn't make that much sense to have, like, a dozen different Ethereum packs. Yeah, it's interesting. Yeah, yeah. Okay, let's, maybe let's take some questions.

If anybody has any questions for a while later? Yeah. As you anticipate more and more chains, launching in the cosmos ecosystem, what sort of deciding factors do you take in to validate which chains? I think being a validator at the moment, you're just a bit like a VC fund.

You have to really do due diligence on the project. You have to look at the potential market, technical potential, at the team and all of these factors, at incentive design, the economic and token model. I think these are very, the various things we look at,

when we evaluate projects. But I think with a shared security model where governance can be deciding factor and also take a lot of the individual work on the one validator away from them, but just put the burden on the governance to decide. I think that's also a very interesting model for the future.

Idealistically, the future of the project, how promising it is, but frankly, we do need to keep the lights on, on the servers that we run. And that's sort of where, where, again, we're really thinking about how to properly set that up, because it's pretty tricky to try to be sustainable on some of these projects. I pretty much agree with the guys.

I would also say, like, other validators that are on there. Like, you can have a great project, but if you're the only validator who's believing in it, you will not run the chain on your own. So I think that's why there's a lot of talks between validators, like, hey, what are you doing? And people are sharing, like, their vision for stuff because they know that they can't do it on their own.

They need each other. So it's funny because we're all competitors sitting up here, but we also talk a lot about stuff that we will want to do in the future. And I think that's something, like, I totally agree with the whole looking at the project, looking at the team, also like the financial stuff and everything. But I think, like, also the other validators that onboard it is. important.

I just want to have a quick follow on to that question. What are the actual costs involved, like concrete costs in running a new zone? I mean, if there were no costs involved, then you would just run everything, presumably, but there must be some costs that make you want to decide carefully. I mean, it depends on which project you're talking about, right? So like, as we said, with the Cosmos Hub, you have different parameters that you can tweak. So every zone will be a little bit different, I guess. And then you'll have to run the servers, for example.

Like, I mean, it's non-travel to actually run a good setup here, and it will cost you money. And if the rewards that you generate with your validator are less than what you pay for your server, you really have to believe in the long-term vision of the project that it's worth for you to pay that cost. Is the computational load significant? I assumed it was just actually the securing it and running it well and stuff. And I feel like if you're running one server well,

it's probably pretty easy to run another virtual machine in there or something like that, or whatever you do. So I was wondering, is there also a computational cost, you have to scale up the hardware and that costs a lot? Yeah, computational cost itself is not too high. It's really a lot about maybe cost of implementation, but with Cosmos zones, like we have a lot of parallels between these setups, which makes it easy for us to automate the process of rolling them out. So it's mostly only the cost of keeping your key secure, which is basically the core, the essence of, running a validator and just having these service and ideally distributed among different data centers and clouds so it's really resilient even within one validator so costs can vary

and labor because we spend an insane amount of time just monitoring chats everywhere governance technical updates it adds up yeah I would sort of add to this like you know at at least from a course one perspective, that like, okay, if he like validate on a chain, then, you know, we also wanna be involved in, you know, where this chain goes, and the decision making and understand it, and kind of in the community and do education and contents,

and all of those things are like a lot of work, right? And especially like understanding these protocols where there'll be differences, and often documentation is not so great and information is lacking. So I think the whole, like all of that is a lot of work. And if you just want to sort of run a node, then like you don't really care so much about the details, then of course that part is in, especially if it's built on Cosmos SDK and you can basically

reuse almost everything, maybe not that high. But that, you know, that kind of also ties a lot into what, you know, what should be the role of the validators on a particular chain. Hi, guys. Thanks for joining us today. So I'm going to be the jerk who makes a comment instead of asked a question. I heard someone say that at launch we didn't have an audited wallet ready. Yes. And there's something that I actually fell over in communicating when I was running audits before our launch. Part of the reason that we were a little behind on that front was that very late in the game, we made very significant architectural changes to the wallet that we were

developing. And we also chose to have that be an independent thing, the ICF and the up funding it on its own. But we spun that out and made those decisions so late in the process. We did have an audit kick off a few weeks into the time, but we had to give them time to basically rebuild the thing. And so I feel bad on one side because I would have liked to have had it. But the architectural changes we made were such a big deal and so much of an improvement on the security side for the user that like, yeah, I am sad we didn't land on time and our flight was late, but it's cool we got there. Yeah, and finally it works, right?

So that's great. But I think the only thing I was saying was that the user in the beginning it was really hard because the only thing that was officially put out there was the CLI. Totally agree with you. Totally feel you on that. Sorry, I just couldn't let it rest. Sure.

So as the, as commissions go down and sort of validators become sort of ubiquitous, from the point of view of a delegator, how should delegators choose a validator and how do you guys think about sort of differentiating yourselves from each other and providing added services or whatever? Like, yeah, I mean, I think it's gonna be hard because actually the things you write on your website, the delegator cannot verify if they are true or not.

And if you look at the details, like how people choose, like if you ask them, why did you choose us, It's mostly like, oh, I looked at this block explorer and I choose one of the top X validators. Like, I picked one out. I liked the website and it was okay. So I think it's really hard to differentiate yourself in the space. But what I think you can do is just be active everywhere, try to help people out if they are in problems, and basically build stuff where people say, yeah, that's useful for me.

For example, we currently developing our stacking dashboard, which is really interesting, if people start to realize that they have to pay taxes on their stacking rewards. And suddenly, I mean, Cosmosup 1 isn't available anymore. The data isn't on any node where you can query it. And we say, yeah, okay, we give you everything for your tax report. You just click one button and you download it. That's a value that we can give you that maybe other validators can't. So ultimately, I think that it's just about what services can you get your customer

that others can't or worse of a job by. there will be, I know I'm aware of at least one project working on rating validators. I mean, there will be rating services basically out there because you need that and then with that, potentially you could put on insurance products on that as well because eventually validators will probably need, will like to have insurance as well. So I think rating products is just a core necessity. Like it will come for sure. and it's very hard to compare security infrastructure

amongst validators because no one is going to disclose too much because talking about security itself is the most insecure part of infrastructure security. I think I also believe in that review part for a bit. There's two kinds of reviews. There's just a review talking, speaking with the validator, interviewing them and asking them for details, which I can totally lie about.

I can have my validator running in my basement and advertise a T4 data center with active, active validation and using the ledger, whatever product, to secure my keys. So I think at some point we'll start seeing really companies doing proper audits of these validators and provable audits. And I think once reviews reach that kind of professionalism, there will be factors where you can decide between different validators. And of course, you have the added value that the balance.

validators can provide, but obviously there will be validators also playing in the category number one, working with custodians' exchanges. And I think there's a whole set of different niche in which a validator can fit. And I think that's how they will set themselves apart. Yeah, I would add, so of course, yeah, security is obviously one thing, right? Because getting slashed is a big risk. So, I mean, we, for example, did the security audit, small security audit, but at least one. But I think the other way that as a token holder, I think it makes sense to think of it, is if you, you know, if you look at commission rates, you know, if you look at the atom price, right, it's of course highly volatile.

And, you know, the future of the network, it could be massive or it could fail. and the kind of delta there is just enormous. And I think so far, right, validators have a very valuable role in the network. And so I think to choose validators based on, you know, to what extent do they help and maximize the probability of success of the project, you know, is kind of the right thing to do as opposed to, you know, let's say there may be some new, or a bunch of values, they may not add much value, but let's say they do like 1% commission or 0% commission

or something like that. Which, you know, okay, in the short term, maybe you save a little bit of money. But, I mean, certainly if that happens at scale in the network, I do think Cosmos will not end up succeeding. You know, maybe you can kind of get away with it. It's just yourself, but I don't think it's good for the network. And I also think one more distinguishing factor is that validators are kind of political parties in a way when it comes to governance decisions.

Of course you can override them. But if you can trust your validator to decide with a specific mentality that you know that they advertise, I think it's also a factor that you can use to choose or you don't choose at all and just hatch your risk over 20, 30, 50 even validators, which is totally also an option for the future. then validation is more or less commoditized and you just had your risk over more because security differences will be so insignificant. Hey guys, this is Jack.

We talked about a number of pain points today already, I think especially around upgrades. I definitely hear that one. Besides upgrades, what are the biggest pain points that you guys, what is the biggest pain point that you guys are running into that you'd like to see fixed? And alternatively, what's the feature that you guys are most looking forward to?

Not IBC, but yeah. Thanks. I'll start with one thing, and I kind of tied into a Florian set, right? So just the data on rewards and being able to basically have a proper data of like who earned how much at what time. So that's something that's, and yeah, and then the data being missed with chain of grades or like not there properly. So I think that's a big, you know, substantial issue at the moment. Just a quick side note on that. Bez is upstairs fixing the event reporting, so we will have better reporting after the next upgrade.

Okay. Thank you. For me, it's two parts. One is regulatory and clarity. Like, you know, blockchain crypto is the entire space is relatively new, and the regulatory bodies are just catching up to it. Within it, proof of stake is even newer. So it seems like there's even less clarity on that friend. So this is sort of out of, I think, that Tenderman's teams, like, you know, capable, you know, it's out of everyone's reach right now, right?

But the best we could do is try to talk a lot with the regulatory bodies and lawyers to clear things out. Another is the governance talks, I think, are a little too dispersed, meaning, like, it's happening on way too many channels. And it's very difficult for validators to track them. I can't imagine how it feels for committee members. So I feel like that there needs to be more standardization of how these discussions are happening. This is Dean. So there's a spectrum of, you know, validating for yourself versus validating for others. And there's analogies in the, in the, you know, pre-block chain world of, you know,

custodian services or fiduciary responsibility your customers or, you know, or any of weak, weaker such assertions. Have you guys talked about that or thought about that or thought about what when validating for others, what kind of assurances you'd like to be certified for, provide, or compete on, or what have you? I mean, for us as a validated, it's also focused on compliance. We work closely with our fund clients. And it obviously also means having some kind of off-chain insurance, which means a really well thought through and reviewed contract with them that ensures them specific details like a reward SLA and specific other points when comes to governance decisions, etc. So we definitely are thinking about these kind of things and it's constantly being developed.

The more funds we speak, the more we learn about our own contracts and what the actual requirements of these customers are. And obviously they are totally different from a normal retail delegator. And I think that's something quite a few validators are looking into and it's extremely important to take care of these things, especially also looking at a liability of a validator, looking at slashing risk, et cetera. So we have time for one last question, and then discussions can continue over at the party, just over where we were having lunch. I was wondering if you feel that, if all you feel that is unethical for validators to hack

each other, or if that's good for the system and part of the security model. Are you aware of such threat? No, no, I'm just theoretically from the white paper. Oh yeah, from the white paper, there was the hacking and a transaction where you could claim a bit, I think, and get a bounty for hacking a validator. I think there's a few factors, one of them being the law, preventing you from doing such things. There can be thousand things written down in the white paper.

A court will probably have a different opinion about these kind of things. But obviously, it's an exciting thought. And we are all, I mean, what we think about when we're working on our validator setups is hardening as it as much as possible to make exactly these kind of attacks, not by another validator, but by an outside attacker, as hard as possible, and ideally mostly impossible, which doesn't exist in security, but as hard as possible. I think that's our job in the end as validators.

I mean, we're all here because we're going to be around in the validator space, at least for the foreseeable future. We're going to see each other constantly, and I do want to keep smiling when I meet with my fellow validators. So, like, I think it's unlikely for validators to be hacking each other, but outside attacks definitely are a possibility. I mean, we had game of stakes, and for a limited amount of time, it was really funny

to see people go offline. It's not that funny if real money is involved and not just you or your other like your competitors, but there's users money involved in this. So I think, yeah, all the good points were said about this. Well, yeah, and then you bring up,

it's an interesting point because you've acted maliciously, so hypothetically you're probably going to lose a lot of your stake unless your delegator really loves hacking. Exactly. And I would say if one of the validators here finds a bug in the setup of another one, the thing probably would happen is the same, like if there's a buck in the Cosmos SDK phone, which we had recently,

that there is a quiet communication between those two parties to ensure that the network itself gets hardened and not to hurt someone just because it's funny or just because you're better than them. I think we're stronger together, growing the whole of the cake and making the market bigger. Okay, well, Hendrik, that was a wonderful note to end on, so thank you very much. So yeah, thanks so much for all the great questions.

All right, everyone, we're going to go ahead and get started with our next session, which is a discussion about governance with our very own favorite Byzantine general, Mr. Sunny Agarwal. Thanks for joining us, Sunny. Thank you. All right. signing again. So yeah. So the hill behind me is called the Pinnix.

It is a hill in ancient Athens. And this is like, this hill is like the birthplace of democracy. Like in ancient Athens, on those steps over there, like orators would come up and like people would like meet in this spot and like, you know, participate in like public debate

and discussion about like topics of the day. and like governance and whatnot. And then, you know, people would, they'd raise their hands and, like, vote. And, you know, that's how this is, like, considered, like, you know, this is like basically early, early democracy. And so today I thought, you know, I was thinking about giving a talk on governance and stuff, but I've actually done that quite a bit. Especially, I don't know if I've done talks on it much,

but I definitely have talked about it a lot on a number of different podcasts already. So, and, you know, but what's actually interesting is I found out, while going on these podcasts and talking about it, me and Jay have very different opinions on governance. And I'm like, wait a second, you know, instead of just me going out and like spouting my opinion on governance, maybe we should let people with differing views on stuff come up and we'll like debate and like,

we'll have live public debates about governance and like, you know, the role of governance in cosmos, we'll have some on like some current events in cosmos, like some active proposals and whatnot. And, you know, we can vote. Like, you know, because I'm pretty sure we have enough voting power of validators in this building that we can probably just, knock out a bunch of governance proposals today, just like, you know, no, I'm joking.

But yeah, so, I mean, here are some possible topics. I'm not going to wear this hat anymore because it's really hot, and I can't hear anything. But yeah, so, you know, here's a couple of random topics that I just came up with. But, you know, if anyone has any more topics, please suggest it. And so I'm thinking, you know, maybe we can just go ahead and do some, you know, five to ten minute debates on a topic. And so, you know, I'll take volunteers and stuff and whatnot. So, you know, just to get the first one kicked off, you know,

that's start, you know, some of them are more about, some of them are more about, like, specific topics, like current events. But let's start off with one that's more about the process of governance. And so the first one, two people have already asked to speak on this. So, you know, I'll give it to them. Next ones will take in volunteers from the audience. So first off, we'll have Jay and Rajel who will come up and discuss about plutocracy. Or at least what I claim is plutocracy.

Jay says it's not. Okay. Hello, hello. And so basically, you know, what we'll do is, we'll just have it be a short debate. You know, I guess maybe what we can do is I'll give you guys both, like, one minute to, like, kind of, you know, propose your idea or how of what you think Cosmos governance should look like. You know, just some framing up the debate, what the topic is. So, you know, there's essentially this debate that I was having with Jay about, like, you know,

should Adam holders be the sole participants in governance? Basically, how I view it, which, you know, Virgil will be taking that point. Well, it's kind of more like, well, I'll let him explain it. But, you know, the question is, should Adam holders be unilaterally able to make upgrades to the Cosmos Hub? or should they have to like, you know, take into account, you know, get the opinion, should we have a more soft governance style, the kind that's available in Bitcoin and Ethereum, where you kind of need this weird, rough social consensus. So, yeah, Jay, how about you go ahead, I'll give you one minute to start,

and be, give your pitch. Okay. So we're having this discussion at some Cosmos after party. And it turns out a lot of it was, I think, semantic differences or differences of, like, definitions. But the position that I was saying was that the best thing we should do for the Cosmos Hub and the Cosmos network is for there to be clear understanding that the stakeholders, specifically the bonded stakeholders, but the stakeholders should, in other words, the atom holders, should be responsible for making decisions,

and that when a validator, say, or a delegator, it disagrees with the outcome of, say, a governance vote that happened by the stakeholders, in general that they should disagree and commit. And also that the stakeholders, it's kind of like they're shareholders of a company say. It's not exactly the same thing as a security or stock or equity, but there should be representatives or experts who are helping guide the development in the operation of this blockchain

to best provide services to customers or consumers who are in all the users of the system. And so I think it's important, first and foremost, to have a clear understanding of who is able to make the decisions. I give you 90 seconds. 90 seconds. Okay. I don't know if I actually have the same opinion that Sunny has,

but how I would kind of approach this problem as to who's making the decisions on the Cosmos Network is I would just start off by saying that, like, I don't know, it's my opinion that a lot of the atom distributions are, and a lot of distributions in cryptocurrencies in general, are, oftentimes more or less arbitrary. So, you know, I think that there's the possibility that you can have, like, a misalignment between the people who are actually making the decisions, aka the atom holders, and, you know, the best option for the technological development,

aka, you know, certain people who are making advancements on the code basis. So I don't know, like, I think what's going to happen is I want that, to take place. I think it would be really good if the people who actually hold the explicit power on a network are the ones that are making the best decisions for the network. So I think there's like a few ways in which this kind of entropy can dissipate one way, which I think is obviously already happening is you know a lot of people are learning about the technology. So you know if you are a stakeholder in a system naturally speaking you're going to become more very very very in the system and I think there's lots of that going on which is freaking amazing and then yeah I mean like a more like radical dissipation is the potential for

you know and I wouldn't imagine this happening in the short term but like oh all right let's go all right you guys have maybe like three or four minutes kind of like see if you can reconcile like at least figure out what you know solve governance in the next three minutes like human governance is solve it um Okay, so, well, I think, yeah, I think that it's, yeah, the distribution is not optimal. Yeah. I do think that the atom stakeholders will, that it will evolve over time to become nearly optimal, or not, you know, sufficiently close to optimal.

I don't know how optimal it can really be, but, but it's just that, for example, there's going to be a bunch of other tokens on the cosmos up, say, right? or other currency tokens. I think for the photon token or other currencies, I think it makes sense to have a separate governing system just for that token. And maybe something more long has maybe like voting terms or periods, time periods, you know,

so that more people can participate. Whereas in the governance of the Cosmos Hub and the operation of it, sometimes, and often you have to react to things quickly. So there needs to be different kinds of governance systems between, say, the operation of the Cosmos Hub and the governance of tokens and the issuance and inflation and all that.

So as long as there's like these clear separations, I think it's good that, and as long as we provide sufficient ways, ensure that there are ways to exit the system, I think it makes it so that this expert group of validation delegators who are voting on behalf of trying to, you know, trying to provide the best services for everyone, including other tokens and voters there,

is probably the best system that can quickly evolve to become a close to optimal solution for everyone. Yeah, I would agree that like through the decentralization, you know, through the decentralization of governance, by actually having many different networks, aka through zones, yeah, I mean, it becomes an ecosystem. So whatever governance system is actually driving technological development in the most rational way, hopefully in the long term, is what's going to win out. And maybe it's not one, you know, it's probably going to be several working together. The one other point that I just kind of want to plug in here,

which I've been thinking about a little bit, is the possibility that, like, through having a lot of stake in a network, you might actually be driven to make poor decisions for that network in the long term in favor of short-term profitability for whatever your token is. So I don't know. It's just like an interesting idea that like why, like, for profit.

organizations and corporations can sometimes make worse decisions based on their own self-interest than you know what the true ideal solution is in the long term for the for the technology for instance so I could imagine that like you know maybe there's gonna maybe there will be different types of zones that don't don't have the same kind of voting procedure as one atom one vote that maybe will end up inevitably driving the technology I don't know we'll see I mean Okay, so for Jay, like, you know, you're analyzing it to, like, shareholders, right? You said that, you know, it's not a plutocracy because, you know, what do you call Apple shareholders of plutocracy?

Well, by the way, not necessarily shareholders, but also including, like, the board members and the employees and so on it. So, I mean, so, you know, one of your least favorite companies in the world, Facebook, right? Like, you know, maybe they might be, like, their shareholders might be making decisions to, optimize their profitability to the detriment of society, which, you know, we can't into a debate about that, but, you know, you seem to think that. And so, you know, how do you know the atom holders just won't do the same thing, that they'll ultimately degrade the experience of the entire blockchain ecosystem in order to profit themselves? Okay, we're really putting me on the spot here. Thank you. Yes. I think that what's important

is that there's exit. Byzantine general, that's what I do. Okay, okay. So, Byzantine general. I think that the problem, the biggest problem I have with Facebook is that they don't provide an exit. They have like this network effect, a social network effect. So Google Plus had, Google Plus was exit, but the network effects of Facebook were just so strong. I mean, sure, you can go to like a different hub, but like, you know, I bet the network effect of the cosmos hub are going to be really strong. Well, look, Facebook consumers cannot like get together. and say, you know, we don't agree with this censorship policy.

So we're going to take all the Facebook's data, fork it, and create a new thing called Facebook 2, right, or Facebook Cash, whatever. But with the blockchain you can. So I think that's for me the fundamental problem is that there's no way to fork it out. Yeah, I mean like through all the interoperability that's being developed, it's going to be really easy to have, I think in the future, like cross-zone applications, for instance. So, I don't know, that I think that provides a very much, a pretty clear exit strategy.

Like you could be using an application that you want to be using and not have it be dependent on necessarily the Cosmos Hub, but on some other hub. You could have it interoperating. What do you say it has less to do? The benefit here comes from the open

source nature of the Cosmos Hub, where the fact that if you don't like it, you can go fork the code while you can't do that with Facebook? You can fork it, or you can create, as long as we make the protocol so that you can create another hub and make it easy for others to use that hub and strangers to do it, if they choose to and there's competition. So like you know, so you're going to get bad apples, right?

Or companies or groups with with bad culture or ideology that you don't agree with. And that's okay as long as there's enough competition that through market forces and the ability to exit, people will arrive at a pretty good dominant solution eventually and just kind of settle there. You know, I'm sure it'll, yeah. Like imagine if the Facebook Facebook application had the capability to, you know, how, like you could just be using your Google Plus account or whatever it is inside of your Facebook UI. Like I think that that's kind of a solution that we'd like to see

with the interoperability of the applications across the network. Cool, looks like we, all right, we solved it. Right. All right, what do you guys want for the next topic? Someone calls something out. Ah, yes. This is an idea about, like, okay, how are they, I'm personally going to nominate Chris for this one, to take the pro, arguing for the concept of revocable dictatorship. And then, do it someone like to take, someone who's familiar with the topic want to take against? All right, Jack.

All right. Thank you guys. Thank you. How about Chris just goes ahead and introduces the topic as along with? I'd like to start out with a postulation that democracy is a really bad system of governments. Democracy doesn't do a great job at choosing the optimal decision. It doesn't do a great job at representing stakeholders, but what it does do pretty effectively is allow the citizenry of a common, say, of a country, but of a common resource to kick out bad governors. Notice that we never choose to do,

accepting, perhaps accepting Switzerland, we never choose to do direct democracy in choosing laws in our political systems today. Rather, we elect representatives. How well that works is debatable, but one of the reasons in practice why it often doesn't work so well is that the underlying resource,

land is finite and protected with a legal monopoly over the use of force. However, in blockchains, we don't have this problem, the Cosmos Hub, any hub, any zone, Bitcoin, Ethereum, all are subject to what I'd like to call fork threat. That it's possible at any point in time for anyone who wants to change the rules and launch a new version of the system, including the state, because the state can be ported, it's public. They can do so. They can convince all the users of the system if they can switch the social consensus to start using a new version. So I postulate

the dictatorship has just become a lot safer. Instead of having democratically elected governments, which we have to limit in their power, their ability to be flexible in choice, and their ability to take different points in the design space and experiment, because they have this monopoly on the use of force and they occupy land, a finite resource,

we can just have many blockchains with dictators. Some of those dictators will do terrible things, but that's fine, because people can exit. And over time, the selection, the natural selection effect of the better dictators, just like the natural selection effect

in markets on companies, which are dictatorships, which are hierarchical structures, will lead to blockchains competing as systems and providing, in the end, a much better selection for the end users. Right. Jack.

Wow. Where to start there. So, aren't we in this whole, blockchain thing to like avoid centralization of power in individual people. For every Cincinnati's, for every George Washington, there's 10 Stalin's and Hitler's and Mao's, you know? And I think that the history of centralized control throughout human history shows that revocable dictatorships don't work and lead to bad outcomes.

I think your points around blockchain systems being slightly different is potentially true, especially I lost my train of thought there. I'll come back to that one. But I would rather see us explore more democratic voting methods for improving democracy. I think right now we have these very infrequent elections

that are relatively like high barrier to entry in terms of information. I think especially local elections are extremely difficult like that. But what about it? Instead of looking at revocable dictatorships, we look at things like liquid democracy and quadratic voting and other democratic implementations

that help solve some of the issues that we see with democracy today. You guys can have it back and forth. Chris starts, though. I think we can just sidestep the problems by not having democracy. I mean, you're right, democracy has problems. I absolutely agree with that.

Those problems are really complex. They result from multi-stakeholder, you know, gain theoretic challenges, they result from sort of the differences between how memetic theory and large-scale human networks work versus how our emotions were evolved over millions of years of really, really small group dynamics. Those two don't match up well. This causes huge problems, especially in accuracy of information and media, in choosing in sort of public choice theory and choosing based on the utility of many different stakeholders

in a network. And I postulate that the reason why human civilization has become so much wealthier in the past several centuries is because we have moved as much of our decision-making frameworks as possible to dictatorships. Companies are dictatorships. The idea of a free market of companies is just the same essential idea as a free market of blockchains, except that blockchains can credibly commit to enforce particular rule sets to behave fairly, say, when running a currency, when running a system

which a lot of people care about in a way that companies really can't do, even if they wanted to, and in practice, e.g. Facebook, they don't. Also, couldn't... To your point about revocability, wouldn't a blockchain allow revocability to be maintained in a way that maybe human systems don't?

I think that's the only valid argument for this. But... I also like to clarify that I don't even think the dictatorship means to be revocable. I think you can just for the blockchain. So to your point about companies specifically in companies being dictatorships, also at large company scale,

we're seeing more and more companies run as essentially large bureaucracies. And I think that that kind of ideas maybe not as accurate. Is it the comics from the audience? Yeah, Chris, I want to ask, is your idea of an ideal blockchain actually just a MySQL database

running in a shoebox in your closet? Like, isn't that how you would be... Maybe you'd run out of a data center, but wouldn't that be the blockchain with the dictatorship? I mean, that way you've controlled it. You have the admin password, right? That's a dictator of the admin password. Wouldn't that be...

Well, a primary difference is that the MySQL database is private. So to be clear, the reason I think dictatorships work much better in the blockchain context is that the exit costs are really low. And hopefully inter-blockchain communication will make the exit costs even lower. So when do I get to build the dictator module where there's a key that allows you to make arbitrary store mutations, and it's controlled by governance? So my proposal is... No, no, no, no. So the other part we're talking about here is credibly limited dictators. Dictators in the real world can exploit the monopoly over the use of force to extend far beyond whatever they had initially said they were going to do.

Well, this dictator would be credibly restrained. like governance would control the key and could vote him out at any point, but the dictator could use his power to arbitrarily change state. That's something you'd be in favor of? I think it would be interesting. Again, there's an infinite space of possible

blockchains, and they can have different restrictions on their dictators, so I'd rather we explore the full gamut. Maybe not, you know, the data has to be public for the forked threat to be there, so I don't think of MySQL database works. But a one validator chain with some weight of exit.

I mean, that's plasma, right? That point in the design space is already being explored. Question. I'll make an opinion. I'd love to get your feedback on it. Is it maybe true that if you have recursive

liquid democracy implemented on blockchain, what people will tend toward is actually eventually a kind of revocable dictatorship that through liquid democracy, what will emerge is that people trust indirectly as perhaps a singular person. I think what we've seen is that as societies have become larger,

the ones that have been more successful have been more open and decentralized power more and more. And I think in Europe and America, we've seen a lot of that, especially for the last hundred years, and I think the systems that will end up winning and the ones that I personally want to work on are more open and democratic and less closed in dictatorships. But anyway, that's more than a literary.

I disagree. I would put open and democratic in opposition to each other rather than in conjunction. Yeah, yeah. I think that's a good idea. What do you guys think about a proposal on the Cosmos Hub that, you know, what we can do is we can elect one dictator, right? And who basically gets 51% of the voting power for a year. I'm not touching this. But, but 33% of the voting power can veto them. and if they get vetoed, all of their atoms get slashed, and they're basically shunned and kicked out of the Cosmos community forever.

So I want to note that I think there is one other advantage of the current Cosmosub governance system that mature democracies don't really have because they've reached this threshold point of memetic competition. But right now, Cosmos governance is effective at producing interesting ideas. And that's a useful function of a democracy. I'm not suggesting we get rid of that. So we would still want in this dictator example...

Anyone can propose that the dictator just has 51% of voting power. Yeah, I think as soon as we have IBC, as soon as a credible fork threat exists, so that if I don't like Sunny the dictator's decisions, I can launch the Cosmos Hub version 2, and we're already in version 2, version 1A, whatever it is, version anti-Sunny, version cloudy, Cosmos Hub cloudy,

and the Cosmos Hub cloudy will change the rule set, and people who want to migrate over IBC can individually choose to do so, since the inter-operation protocol will continue to function between those chains, a kind of collective shelling point game doesn't need to happen. So individuals can make choices. The fungibility, say, if atoms would be maintained, and everybody wins. Instead of choosing between people with opposing preferences,

we can get the best of both worlds by allowing them to vary parts of the rule set according to what they want. I want to introduce into the conversation the concept of polycentricism from the Ostroms. The idea is that different decisions need to be made at different scales. For many, many decisions, we should be acting as sovereign individuals because it's best for us to just make the decision on our own separately, and that's sort of the ultimate and decentralization. And then the reason we engage in activities where we coordinate with each other

to arrive at a decision together is because there's some underlying problem that is best solved if we can arrive. at a joint decision. And that takes us up all sorts of levels of scale. I think what we're all agreed here as a theme is sort of the general theme also polycentricism, that you should always make decisions separately at as fine grain as possible. From this perspective, a large blockchain, like a Bitcoin or Ethereum, even if it's decentralized in one sense of decentralizing trust, it's very centralized from a polycentricism perspective because it's all of this, for making a single decision.

I think what you're arguing for is essentially the world of trading sovereign individuals, and that's great. I think most activities should occur there, but the reason why blockchains contributed something fundamental to the prior cypherpunk vision of crypto commerce, which was all just decentralized sovereign individuals, is because some institutions, need more credibility than any one person, whether elected or not, can ever have. And so the important thing about a blockchain isn't what it does when there's a governance crisis, is the fact that there's a bunch of rules written down in code,

which is what it does when there's not a governance crisis. And then when there's a governance crisis, everybody understands what we're supposed to do is as much as possible restore things to the point where we have, predictable, credible operation. Another question I want to point one last one is about revocability. Is democracy a suitable revoker? Like let's say we did have a dictator and then a democratic process is able to revoke it. Because like, you know, in the U.S. there's a militia group called the three percenters, right?

And they call themselves that because, you know, supposedly three percent of colonists rose up to fight the British during the American Revolution. And so, you know, if it just depended on democracy, there would have no, you know, the revocation of the British monarchy wouldn't have happened. It needed to be people, you know, relying on force in order to do that.

That does, can democracy act as a revoker? I would, setting aside questions as to the validity of the historical narrative, the other trajectories of colonies, which didn't bother violently seceding from the British it just fine afterwards anyway. I would like to note that that was only to set up the initial state.

Democracy, at least, you know, modulo messiness and practice has been stable in the United States since then, without violence excluding civil war. I think if you look now, the playbook for dictators is essentially to get democratically elected and then subvert that democracy and use that to gain legitimacy. I think that would be a huge problem.

But why? If you were the dictator, Jack, and you got Democrats, democratically elected, what tools would you use to subvert democracy in the future? Disinformace. And guns. The difference and the monopoly on the use of force. Putin's doing pretty good at just the disinformation these days. Sure, the control of media and the monopoly on the use of, I'm not suggesting dictators

in practice for human governments. That sounds terrible. Let's do far less of those. But dictators for blockchains sound pretty good. Yeah, fair enough. All right, there we have it. Oh, sorry, one last. Yeah, maybe this is too much for this session, if you're going to switch to another governance topic.

But I was wondering, all this stuff about dictators, I feel like it's kind of just discussions about one particular nuanced decision-making technique, right? I mean, you can use a futarchy or any kind of other complicated thing. Instead of a dictator, dictator is just one of those class of things. I would argue that when you get down to it, the one governance rule is that one-third of, one-third of token holders or validers, there's a balance between those two, but can halt the blockchain, right? So it's like, would you

guys agree that all this stuff about whether it's a dictator or not a dictator's votes or liquid democracy is actually just debating about the nuances of how things get done? I mean, it is kind of like debating about company organization, like when we're talking about blockchains, yeah, I think so.

Yeah, I mean, I want to clarify that there are two dimensions here and they're different. One dimension is something that like operational dictatorship. An operational dictator taken to the extreme would be a MySQL database. And that's not what we're arguing about. We're arguing about logical dictatorship, whether one particular entity has the ability to change the rules, given that other entities have the option to, you know, fork the rules and choose their own. In a sense, everybody's a dictator.

That's the world that I'm proposing. All right. Thank you guys for coming up. Awesome. Thank you. Thank you for joining us on this week's episode. We release new episodes every week. You can find and subscribe to the show on iTunes, Spotify, YouTube, SoundCloud, or wherever you listen to podcasts.

And if you have a Google Home or Alexa device, you can tell it to listen to the latest episode of the Epicenter podcast. Go to epicenter.tv.tv slash subscribe for a full list of places where you can watch and listen. And while you're there, be sure to sign up for the newsletter, so you get new episodes in your inbox as they're released. If you want to interact with us, guests or other podcast listeners, you can follow us on Twitter. And please leave us a review on iTunes. It helps people find the show,

and we're always happy to read them. So thanks so much, and we look forward to being back next week.