Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - DappCon 2019 – Tales of Governance: DAOs, Swarms and Anarchic Systems

Episode Date: October 8, 2019

As we take some time to record new interviews, we’re releasing content from DappCon which took place in Berlin in August. This week, you’ll hear a panel moderated by Sunny all about blockchain governance.The panelists where Ameen Soleimani of MolochDAO, Stephanie Hurder of Prysm Group, Jorge Izquierdo of Aragon One, and Sebastian Gajek of ditCraf.Topics covered in this episode:Hard Governance vs. Soft GovernanceWhat types of governance we should apply to different systemsDifferent approaches to governance formalizationHow we should govern things like trademarksRepresenting all stakeholders in a governance systemBuilding in exit mechanisms in DAOsConservatism over Liberlism in governance mechanismsHow to account for different value systemsEpisode links: DappConAmeen Soleimani on TwitterStephanie Hurder on TwitterJorge Izquierdo on TwitterSebastian Gajek on TwitterCommunity manager job postingEpicenter Meetup at SF Blockchain WeekThis episode is hosted by Sunny Aggarwal. Show notes and listening options: epicenter.tv/308

Hi, welcome to Epicenter. My name is Sebastian Quichuio. We're still recording new interviews this week. I'm happy to report that we have at least a month's worth of interviews in the pipe, which doesn't happen often. And we're still recording more in the weeks to come. So today we're releasing Sunny's Tales of Governance panel, which was recorded at DAPCon in Berlin last month. The panel was with Jorge Esquerdo, Sebastian Gaiyak, Amin Solomani, and Stephanie Herder. And the conversation revolves around things like the types of governance that we should apply to different systems and applications, the different approaches to formalizing governance on chain and on second layer solutions, and so on. I know this is a topic that Sunny is really passionate about and spent a lot of time researching and thinking about. And so I really hope you will enjoy this conversation. I certainly did.

as I'm recording this Brian and I just finished our interview with our guest for next week's episode which is Yoni Asiya, the CEO and founder of I Toro. I'm really looking forward to putting this one out. It was a fascinating conversation and I can't wait to get everyone's feedback on this interview. Also as I'm recording this, DefCon is in full swing. Sonny and Frederica are over there in Japan, probably having a great time. And they're both speaking on day four. so check the schedule if you'd like to sit in on their talks.

And yeah, definitely reach out as well. I mean, you should go and say hi to them. And also, it looks like my travel plans are changing. I had anticipated not moving much until the end of the year, but I've decided to go to San Francisco for SF Blockchain Week and SF Blockchain Week epicenter, which is the conference that bears the same name as this podcast, but is organized by different people.

That's on October 31st and November 1st. I am going to be emceeing at least one of the days and also moderating the wallet panel. And Sunny is also moderating a panel, I believe. The schedule has yet to be finalized. But you can go to sfblockchainweek.io for your tickets, they're still available. And you know what? If I'm going to go from Paris to San Francisco, you better believe that we're going to do a meetup. So go to epicenter.orgs slash sF to register, neither to do.

dates or the venue or anywhere near being finalized. If you go to epicenter.rocks slash sF and register there when we have the dates and the venue, we'll send you an email to let you know. And finally, as I mentioned last week, we are still recruiting a community manager. So go to cryptojobslist.com to apply. You'll see the listing there on the homepage. And once again, I want to thank my friend Rahman, the one man T's. behind Cryptra jobs list for featuring our listing.

So with that, here's Sunny's Tales of Governance Panel. Thank you guys all for coming. Yeah, and let's get this panel going for lunch. The topic of today's panel is governance, which we just heard of talk about. And to get started, let's just, you know, maybe go ahead and introduce ourselves. Let's talk about, let's go down the line,

maybe introduce yourself, why you're interested in governance, and your most favorite governance governance story. Like it could be in blockchains or it doesn't have to be in blockchains. Mine, for example, is the 2015 New Zealand flag referendum. I'm a flag geek and they went through this whole process of trying to fix the New Zealand flag and they ended up exactly where they started and it made me very sad as a flag fan. So you guys go ahead. Hi, I'm Amin Soleimani, CEO of Spank Chain, Summiner Malek Tao.

favorite governance story. I'll just pick an Ethereum one. It was the combination of Aragon grant proposals 41 and 42, right? Where there were simultaneously two votes being held to decide, one, whether or not to restrict Aragon from participating in building on Pocod, and the other to buy dots. And it would have been really funny if they both passed. But all Ultimately, the buy dots failed and the restriction to build on Pocod failed. And so they are now building on Pocodot but not buying dots. Hi guys. I'm Sebastian. I'm founder of Dittcrafts where we use DOW approaches for software engineering. Yeah, I would call it also a very interesting DAO or something related to that.

And as the European, I think all European have a bit suffered from the Brexit. The Brexit is in that point very interesting because it shows that democracy or democratic voting, which is like the core of any DAO, can work, but sometimes it's also vulnerable to attacks. And this is a very, very important lesson for us who build DAO's, that we really have to be very cautious about the protocols we implement, such that DAO's really work in a very very very very decentralized and democratic way. Hi, I'm Jorge. I'm from Oregon. And actually, I mean, took my example of a fan governance thing.

It was super, super interesting to see how out of the blue there was a kind of this battlefield in our governance proposals. And when the deadline for proposals for the previous Oregon network vote was, there were like these two proposals. And then the vote and process that was kind of decided at the very end, it was really interesting to watch and we didn't expect that it would happen so soon like such two proposals with that might attention. It was very fun to see you. Hello everybody. Stephanie Herder, founding economist with Prism Group. Those of you who remember five minutes ago, I was up here.

So there are lots of cool examples. I also really like the Brexit one, especially the leave bus that was just driving around, you know, issuing property. about what would happen if leave was voted for, which turned out to be a big lie. Another example I really like is in the last men's World Cup. Japan advanced out of the group round for the first time ever because of the, I think it was the seventh tiebreaker, which was the number of yellow cards. This was the first time this tiebreaker had ever been used. And the thing I really like about this example is it's kind of an arbitrary decision-making rule. And if it had been introduced during the tournament,

no one ever would have used it. But because it was aligned on and agreed upon in advance, no matter how silly it was, it worked. Right, and the World Cup didn't explode. So design your governance in advance. Cool. And my name is Sonny Agarwal. I work on, mostly on Cosmos, but a bunch of other things. And I feel I didn't give enough background on the New Zealand flag thing. Everyone hates the current New Zealand flag, and they had like five competitors, and there was like a ranked choice voting in a round one, and then one of them won, and then that one was put up against the current flag in a round two, but enough people who were upset that theirs didn't win in round one,

voted against it in round two, and so we ended up back where we started. So that's the context of why I hate that flag referendum. Going on. So it seems that we've been having a lot of discussion about governance throughout the space, and I was at the governance games event that was hosted by Zer Knowledge yesterday, and I feel one of the topics that was very prominent was this idea of on-chain versus off-chain governance. I'd like to rephrase that a little bit to more rules-based versus discretion-based governance or hard governance versus soft governance. I don't know.

What do you guys think is the best way to maybe, what's the best terminology that we should be using and how do you compare these and when do you think we should use each? No, I think there's something that we've been seeing when running our own governance process is how important the off-chain or like the process that doesn't involve just voting, just like all the discussions that happened before, how important that is. And I think of the on-chain part just as the mechanical process by which people are just like casting their boat and like giving their inputs to the machine. and then the machine just aggregates everyone's voice.

But I think more and more the other process that comes before to even go into boat is way more important. I think on-chain and off-chain is a good terminology. People use on-chain governance to describe the governance of a protocol itself. And if that protocol has treasury management, then where the funds should be spent, if the protocol has upgrades, like something like Tezos, how the upgrade should go.

But that isn't the entire category of on-chain governance, even though it's most commonly used to describe that thing. Like Mollock Dow has on-chain governance because the votes actually determine how the treasury is spent, but it does not have any influence over the protocol decisions, right? And I think that in that sense, on-chain governance has like a bad rap, because most of us, in the Ethereum community, at least,

want our protocol decision-making to be separate from, you know, something else. We don't have a treasury either, so there's really just no on-chain governance for anything related to the protocol. But then for off-chain, something like Aragon, they have their treasury in a multi-sig, and then they have voting that happens from the token holders. And so they still have control. It's their discretion whether or not they follow the votes. of the token holders. And I think that's a much safer way to start out. Because if you don't do that, then you're in your token holders do something unexpected

or somebody who might not be incentive aligned with you buys up a lot of your tokens to get your protocol to do what they want instead of what you want, then your whole protocol is now at risk. Stephanie, you were smiling there. What was up with that? No, I think that's a, I mean, that's a double-edged sword, right? allowing discretion in whether decisions are implemented can be good or bad depending on what you're looking at. I think, as I mentioned at the end of my talk, I agree with this view

that on-chain versus off-chain is not really the key question. It's, you know, you need all these different parts of governance to work. You need information. You need another example I really liked was the submitting suggestions for proposals you were talking about. That's another piece that sometimes if proposals can only be, you know, fully coded, sometimes you don't get that kind information. So it's far more important to have all those different pieces than to, you know, worry about on-chain versus off-chain. So I think AIMAN made a very, very good point. So the question is what kind of, say, decisions shall be democratically decided. Some are very crucial. For example, if you really want to implement a stable product, that's why I think

asking the community for some kind of recommendations for the right way, but still say the team should decide whether this is a really important feature or not. Versus there are things situation, for example, when it really comes to funds a project. Here I believe that it should be on-chain simply because it's really the community that in general would contribute with the donations to the project and they're like investors. should also have a right to decide what happens to their investment. So I mean, I guess what I'm trying to ask here is, so oftentimes this is a question about like what is the best governance thing? And I just don't think that's a valid question,

like different things need different types of governance. The title of this panel, I put it as Dow's Swarms and Anarchic Systems. And I think these are like, you know, systems that are in decreasing order of formalization of their governance processes. And so, I mean, For example, Mollock Dow has pretty strict formal rules of how you interact with it and what the rules for how it changes and proposals are done and whatnot. And you obviously, you know, you created that, so you believe in that. But at the same time, you for Ethereum, you believe in the more anarchic governance of Ethereum. And so what is it about Ethereum governance as a chain that you believe in anarchic systems, but in this Mollock Dow idea you believe in more formalized systems? Yeah, so the reason that I'm building on Ethereum is because it is really hard to shut down an application that you deploy to Ethereum.

You would need 51% of the miners to censor you for a really long time. And if it was, for example, like a coin vote on who to censor or somehow fork the protocol in order to set somebody's balance to zero, then it would be a lot easier to do stuff like that. and that would give me less confidence to build on Ethereum, and I think that that would give less confidence of basically everybody to build on it. But when it comes to just, Malik Dow is not about protocol updates,

it's just about how do we spend money on grants. And in that case, your voting is proportional to how much money you have, and you can leave whenever you want. And that's just like a better system for people who want to put money towards this thing because it's safe. So I'm a favor a bit, but again, from case to a case, it might be different, but in general I'm a favor in giving a bit more structure.

Because the real power of the Tao is that you really have some experts, some community, people that care what you do. Right? They're passionate about that. Asking them what is good or bad for the project, for the decision is for any, say, project, which really wants, wants to grow, actually a key feedback. But in order to leverage this, say, community power, this community knowledge, you really have to help them. You cannot ask them for a, say, a very universal question,

but you really have to guide them, you really have to precise, you know, what kind of answer you'd like to have from that, just in order to make sure that, say, the majority of those community voters really do understand what kind of information you need from that. So there's a good analogy maybe to say classical project development. For example, if you design and develop a feature, once a feature is done, the first thing you should do is,

you ask some kind of early adopters, do you like it or not? And this information is really like gold. Because without that feedback, right, you might develop feature by feature by feature, and end up in a product that really no one wants. And that's why community is key. And help in the community or guide the community to give you some kind of feedback which is relevant for the progress of your project is also important. You know, in my view, a lot of the early projects that didn't really have formal

governance have just gotten incredibly lucky. And through a combination of charismatic leadership and people being in the right place at the right time, they've avoided completely exploding. But I think in the future most projects will need, I mean, the degree to which you're going to have, you know, different kinds of specified governance. Do you have one process or a thousand I think is going to vary? But I think, you know, most projects will end up having some kind of foundational governance, which at least allows you to update the governance itself, right, to evolve over time. So you'd be more in favor of going forward

new projects or new chains even using more formalized processes, more in the realm of like Tezo-style governance with formalized processes? I think so. One of the analogies I like to use is the representative versus the vigilante, which is that in a crisis situation, you know, when there's a vacuum and there's not a specified person who's going to take control, your system is vulnerable, right? You can just have, you know, random charismatic leaders show up and take over. So, you know, at least specifying what's going to happen in a crisis situation and who has power

then is very useful. One way I like to think about it is that we have like layers and you have a bunch of formal layers and almost always inevitably at some point you have an informal layer. And I think when we're talking about whether the chain should have formalized governors or not, we're basically asking about where to put that breakpoint, where on Ethereum, for example, the break point is, you know, the chain is anarchic and the stuff on top is formalized. In Tezos, the chain is formalized, but then the process, the meta chain, which is the ability to fork Tezos.

And we see that happening today where there is a project that's in the process of forking Tezos. And so then we just basically, we still have, all of these things end up becoming an anarchic system, but we just moved it one layer down. Is it possible to build an anarchic system on top of a formalized system? Yeah, I think that by definition is quite hard. I think it's way easier to build. a formalized system on top of an anarchic system. But yeah, I think that in the case of chain governance,

in the case of Ethereum, it's very interesting that the decisions that are being made with the EIPs are very, very different from reprising some upgoats due to clearly technical reasons to making economic decisions that are very, very important. And for those, I believe it would be interesting to get eith holders involved in those

because it's like making economic decisions there are the stakeholders that should definitely decide and not the people that are just writing the code for that. What are some of the cons of anarchic systems when it comes to protocol governance? So, you know, whether examples from Ethereum or from Bitcoin, like, you know, I think that like some of the Segwit 2X stuff shows that like when you don't have more formalized systems,

you get in a case where you have loud voices. And so how do you solve that in those cases? I don't want to say solve, but definitely anarchic systems are less efficient. In a highly contentious issue, it's pure chaos. And it ends up being a free-for-all where basically, if it's like a binary split, then two groups form and both try to tell everybody that they're bigger than the other group. to try and accomplish the self-fulfilling prophecy of attracting more support so that they eventually win a hard fork showdown. And that means that you are trying to recruit every single person in the protocol to join your side and signal on that side.

And that's not an efficient process. If you had a formalized system that had, for example, representatives, you would say, okay, well, I'm just going to point to that person somehow signal that I'm supporting them and then allow, that person to make a or influence the decision-making process on my behalf, which saves me a lot of time as somebody who's delegated that responsibility. One thing I like to think about is sometimes maybe what you need is formalized governance over property and assets and things that aren't limited property and assets are you don't need governance over. So I mean, I think the easiest way to explain why Mollick needs formalized governance is you have a scarce assets that you're governing.

What do you do in the cases where we have the option to make an asset either scarce or not? And I think the best example, and probably the most relevant to blockchains, is trademarks. So, you know, we have some trademarks in the space, like Bitcoin are completely, like, you know, just out in the open, anyone has the option to call their own thing Bitcoin, and it really is up to the soft consensus to decide.

what is true or not, while some projects like Zcash and Ethereum gave it to a foundation to enforce the trademark. Maybe there's other ways of enforcing the trademarks. And so what do you guys think about? One, how important are trademarks and like names and how should we govern names? I think it's a general question about the value of trademarks, right? I mean, they have a reason why people apply for

trademarks because they think that say the name or the product has certain value and they would like to protect it then there are other a lot of other applications where a trademark has no value because it's the values maybe in the product or in the team or in the property their own and another question is so you know whether say a Bitcoin or Zcash you know is the trademark and I think the team or the people behind that should decide whether they appreciate the value of this trademark or maybe the product, you know, the software stack they develop. That should be part of the community decision.

So for Ethereum, what do you think that long term the trademark of the name Ethereum should remain in the hands of the Ethereum Foundation? And if not, what is a alternative for who should govern that trademark? Or should we just put it out in the open like Bitcoin? does. I think something that would be pretty cool, even though it's like a bit sci-fi, is that if you have a Tao controlled by eth holders that controls a legal entity that can legally hold a trademark and allow eth holders to control this. But if Ethereum blockchain itself split, now there's which eth holders that chooses that

trademark Ethereum? Yeah, that would be interesting. I mean, you could also have like a coin boat with the balances in the past to make those sort of decisions. But that would be an interesting challenge, yeah. So basically we'll say that like, okay, there'll be a trailing track of balances. Let's say, you know, we'll decide the balances from one year ago are what decide the trade, get to vote on what the trademark is. That could be an option, yeah. That would be interesting.

Seems reasonable. I mean, I don't have a better plan to keep the foundation until the foundation goes away. This is why we need lawyers. Are any of us on stage lawyers? No. Okay, well, that's problematic. So do you think that in the space there's an overuse of formalized systems? You know, one question I have about the Dow, which like the original one was, I never

really quite understood it. I never saw the point of it. Why are people having to pool money for, you know, I think it could be done as a much more liveness or I see DAOs as safety favoring organizations while swarms are more liveliness favoring organizations and you know I think the ICO system of 2017 proved that we didn't maybe we didn't need that collective action that the DAO was bringing and so Horei like you know as someone who's building a project that's going out and telling people to build more DAOs like do you think we're building too many DAOs or I don't I don't think we're building too many

I think the ability to come together and pull money with pseudonymous people to do some sort of things. I think it can be super, super powerful. And something really cool around the Dow is the amount of due diligence that was being made in the proposals, even if they were asking for not a lot of not a lot of funding. And I think as we saw in 2017, like there was no like no due diligence at the at the scale that the Dow was doing. So I think that even if it's just by asking money to this particular Dow, it triggers like a big community to analyze a proposal and make a decision, I think that would have been really, really positive.

Yeah, I'm super excited to see more dows flores. I'm also very, very happy to see so many DAWs, because the Tao is, in fact, a very, very powerful paradigm. But as with any new paradigm, we first of all have to learn. We have to understand what is the real power and the real value of this new paradigm. And the only way we learn is just by doing experiments, by trying out new doubts, seeing what works, and to read from that, why it works. Yeah, I think just building on that, I mean, almost any legal system or decision-making system,

you know, gets more formal over time, right? You start with a basic, I mean, I'm going to use the U.S. government again, but you start with constitution and a basic set of rules. And over time, you know, a legal system develops and precedent develops and, you know, people don't want to rethink decisions every single time they're being made, right? So there's this question of, okay, we've seen this before. This is what we did before. Do we have a compelling reason to change what we did? Otherwise, you know, we have a defined process for how certain decisions are going to be made. So I think that formalization is good and we're going to see more formalization either through explicit rules or just people having a shared understanding of how things are going to work.

It's also possible that we might be learning the wrong lesson from the ICO boom of 2017 if we think that the Dow wasn't needed. Because like Jorge was saying, the Dow helped a lot of concentrated due diligence on all the projects that went through it. So there's another reality where the Dow didn't explode magnificently and there was a huge amount to do diligence on all the projects that tried to ICO, and a lot of the scams were filtered out. Another question with Dow's is that, for example, Vlad will often say that one of the issues with formalized governance is that inevitably leaves out certain groups of stakeholders and that it only represents certain factions within a community. When you're building a Dow, how do you

make sure you're representing all the different stakeholders in your community and not just your token holders? Yeah, I think that for this, it's interesting to build systems that are not just like simple majority voting of certain coin holders, but try to build, like, give, identify other stakeholders in some way. And this is the part where it gets challenging, who gets to decide who's going to decide. But I can totally see that we form like this bicameral systems in which you have like the coinboater, like the coin holders voting in some way and then reputations slash identities as core devs system that gets built on the other side. And here you can start

having like see how they're competing incentives basically bound their power's. And I can totally see a governance system that gets inputs from many different sets of stakeholders. But again, the challenge is who gets to pick these people in the first place. And I think there's a lot of work to be done here. And just to add to that, I mean, any formal governance system is going to be imperfect and is going to need to evolve over time. And that's okay. And so just saying, well, formal governance is always imperfect, therefore we're not going to have

any is, in my opinion, not the right way to go. I also think that we still have to learn a lot. And I think one of the key challenges will be to understand, say, what is the right voting scheme? Because the voting scheme is nothing else than a consensus protocol, but for the people, not for the machines. Look how many years actually the community needed in order to learn and understand how a proper consensus protocol for layer one works. And now we're facing exactly a similar challenge. We really have to learn to research to explore how, say, a DAO-based consensus protocol, namely voting scheme works.

And once I think we solve this problem, you know, we will also, you know, have the insights, you know, how to structure and build a DAO that is, say, stable enough, which is not susceptible to attacks, and which really delivers what we expect from the data. down, namely, say, the knowledge and the power of a community just in order to progress. So when you're building an organization, in the blockchain space, we talk a lot about the ability to exit and why that's important. But sometimes you want there to be a bit of cohesive force to the organization that even if people disagree, you don't want it to just, the community fracture every time there's a small disagreement. And so how do you, when you're, when you're

designing a DAO, or any organization, do you decide how much cohesion and how much exit force to put? So, for example, in Mollick, it's very easy to exit and rage quit from the DAO, while, for example, I'm not too familiar with Aragon, but I know in DXDAO, you actually can't exit. Like, there is no ability for you to leave the DAO. You can just stop participating altogether, but you can't actually, like, get rid of your tokens even, or shares in the DAW. So how do you choose how much exit versus cohesive force to put into it. Yeah, something that we're working on now, it's this concept of proposal agreements that we're calling it.

And the idea is we are trying to solve, to protect from 51% attacks in the doubt in a way that is not as destructive or disruptive as exiting, even though exiting can make sense for some types of organizations. So the way that this works is that before making a proposal, the proposal basically has to put some collateral behind their proposal to guarantee that they adhere to the rules that the organization has for making proposals. Like, okay, we accept these types of proposals, they need to benefit all token holders equally or whatever the rules are. And then there can be a challenger that says, okay, this is definitely not the, not bound to the

rules of the organization. And then a dispute is created and there's a dispute resolution process that happens that eventually rules whether the proposal was valid or not according to rules of the organization. So we're very excited to roll this out and have this other alternative to try to not break an organization in case an attack is made. Because some of these attacks are actually pretty cheap to make. In a doubt that is totally public and anyone can propose, it's like totally free to make a credible commitment that everyone that votes yes in this proposal to steal all the money from the Dow

is going to get a share of the money, like all the money that we steal. And this goes like literally zero to make. So you can put boundaries like saying, okay, only members can vote, can create new proposals. But this is the other approach that we're taking to try to keep the organizations cohesive. So a couple pieces. I think, you know, for platforms, I think most blockchain platforms have significant network effects. So in general, we don't want people, you know, stomping off and quitting if we don't need them to. And a couple pieces that we found are particularly helpful in minimizing sort of the number of rage quits, which is a super awesome term. I'm going to use it now constantly because it's great. Are thinking about, you know, first the proposal

process. You know, before even the proposal process, one of the reasons I love that World Cup example is because, you know, having valid governance that people agree is legitimate, no matter how weird it is is very useful. So just saying these were the rules we decided on in advance can reduce the probability you're going to get people stomping off on you. And I also think, you know, after that, you know, if you're looking at more incremental proposals, you're less likely to have a group of people rage quit.

So thinking about the proposal process and also how information is shared can help, you know, keep your community together, all other things constant. Yeah, the exit privilege is important for just protecting the members, right? If the pitching mollock was way really easy because people asked, how do I get out? And I'm like, whatever you want, right? And in an Aragon Dow, at the time, you would have needed to, like, submit a proposal to get your money out

that would have needed to have been approved by the other members. And if somebody controls most of the voting power, then you're sort of screwed if they don't want to get your money out. And it depends on how much the people in the Tao trust each other. It depends how susceptible it is to capture. If it's an open system, this is a larger concern. Molokah's permission membership anyway, so it's somewhat less of a concern. But I wanted to just err all the way on the side of safety

because we were living in the shadow of the DAW, and most people had PTSD Dow, and like, I didn't want to be that guy, you know? So maybe now that we have this precedent, people will be a little bit more comfortable taking on somewhat more risk, and you know what you're getting into up front. Like, hey, okay, maybe, you know, I can get in, but if I leave, I'm leaving like 5% of my money in this thing. And, you know, I can calculate like the chance that I think that it's going to get

hostily taken over and I'm going to lose that against, you know, how much I care about that money. How do you make sure that these voting systems don't, you know, I think there is a value to conservatism sometimes and tradition, and that sometimes over liberalism is also kind of can be dangerous and, you know, populism, for example. And, like, how do we make sure these DAOs that are, you know, essentially DAOs, we've made it decrease the cost of voting and we've decreased the cost of executing the results of voting?

How do we make sure that we don't just fall into these, you know, bad game theoretic traps or populistic, like, situations? Yeah, this is another thing that we're trying to solve with this proposal agreements in which the, the organization, when it's created at the beginning, you can set a set of rules or a manifesto for the organization and say, okay, until we decide to change it, and this is the way that we would go around to change it, all the proposals and everything that the DAO does need to adhere to this. And you can get into a situation that even if you have a supermajority or 90% of the DAO

that says, okay, we want to pass this proposal, if it doesn't go according to the rules that were set at the beginning, it shouldn't pass, even if the organization like a large amount of token holder wants to do it. And then you can have like your process for changing the manifesto that can be like longer or require like almost like a unanimous boat. So I think that's a way like when people get in, you know, what you're buying into and changing that subjective contract of what your organization does. It's like a very, very hard process that requires a lot of time.

So there's time for people to exit or change scores. Yeah, I think that's a great example, and I would even generalize a bit more. So the challenge here is we really need to research, say, what voting protocols really work. And I see populism, you know, like an attack against voting protocol. You know, for example, like when you break crypto, you know, you can break a security protocol. If you have a voting protocol, you need to design it in such a way that is resistant against, you know, maybe populism as an attack. And here, I think we need to ask the research community

to really, you know, think out of the box and maybe come up with new ideas, which go far beyond, you know, maybe the one vote or one vote approach or one stake, one vote approach. Maybe we really need totally new different voting protocols here. Kind of to zoom out a little bit, So, you know, I think one way I think of governance is that it's coordinating to solve game theory problems.

But to set up a game theory game in the first place, you need to assume everyone has somewhat aligned utility or common utility or somewhat aligned values. And what do we do in situations where communities just have differing values? And like an example, like not even in blockchain, like in the real world. Like, you know, I used to think, you know, I used to be, like, pro-open borders. But then it occurred to me, like, what if two societies have fundamentally different beliefs in property rights? Like, you have one that believes in private property and you have another that believes in, like, Glenn Wool's, like, radical markets stuff? How can you possibly govern people who have so fundamentally differing values? I was just going to say, typically, they fight it out.

Yeah. Well, I mean, there are certain situations where you don't necessarily, really want to have everybody in the same community, right? So when you are asking about status quo bias, I kept thinking about another U.S. example, but in the U.S., the Senate has something called the filibuster where you need 60 votes in order to, out of 100 to pass anything. And this is why we don't have gun control, because they have enough, you can't get 60 votes to override the lack of gun control. And so I think that, you know, there are certain circumstances where you're just going to have communities that don't necessarily want to be together.

On the other hand, I will have to disagree with your initial statement. I think that if everyone had the same preferences, we don't even need governance. Like the reason we need collective decision-making is that people do disagree. So there's sort of a spectrum where if everyone had the same preferences, then we just have you make all the decisions, right? Because you have the same preferences as everybody else. Whereas if we, you know, some of us don't believe in private property and others do, then you have Glenn World and another world.

And in the middle, you sort of figure out what you're going to do. what do you do when, for example, you're just in a prisoner's dilemma of a massive scale and we just need coordination. And, you know, for example, I think climate change is an example where, you know, it seems like it's an everyone's incentive to try to solve it. But for any single nation state, it seems in their economic incentive to just fuel development as fast as possible. And so how do we, if not governance, but how do we encourage coordination? Governments are interesting because they govern down, but nothing governs them, right? Like, governments exist within a state of anarchy relative to each other. So you would need some other form of government or governance structure to then impose its will on each country

and benefit the countries that do the climate change thing and don't attack or somewhat harm or inflict some cost on the countries that don't. And so how do you get that? I don't know. Is it a blockchain thing? Maybe if it's like, you know, throw eggs at the senators that haven't, like, voted for climate change and, like, we make a Dow for that

and then all the senators decide that they don't want to be the only ones to not vote on climate change. That would be really cool. If anybody's trying to do that, let me know. Do you have any questions from the audience? Would anyone like to pose any questions? Yes.

I kind of feel that, especially in Pocadot, but maybe in other systems as well. We are getting to a point where we kind of create the same structures we already know from the real world. We just put tokens in there and some kind of blockchain infrastructure, but at the end, it is not any different. So if you have any take on that.

Can't speak for Pocodot. It seems kind of complicated. I hope it works. Same here. I think Pocodot has its own ecosystem. I'm not very familiar with all the details. I'd like to take a view that maybe, that might not be a bad thing.

Like, you know, I think we should maybe approach it, that we should respect that the current systems in the real world have some reasons that they develop in that way. And there might be ways that just, like, even the transparency benefits of being on a blockchain and the openness benefits are beneficial, even if we have some of the similar structures that already happen. I'm looking to this from like, I've been doing a lot of research on the monetary side of like how currencies work and stuff.

And I think that like even if we, even like something like a dollars on the blockchain seems to be beneficial on net. So I think it's good for experimentation that different projects are trying different types of governance. I agree with that. I think that there are a lot of systems that are in their place for a reason. I think the more I work in blockchain governments, the more amazed I am that most of our national. governments work the way that they do. They're remarkable. And, you know, having people use similar system with tweaks

will allow us to see what works and what doesn't. Another thing we're actually looking into that nobody's mentioned is, you know, the Internet has governance. And unless you're super involved in it, you don't think about it because it just works. And a lot of the problems that blockchain governance is having was solved by, you know, ICANN and the other governance bodies of the Internet. So I think that there's a lot to be learned from them, too. One more?

Yeah, thanks. I appreciate the opportunity to ask a question to you guys. So governance is really like a matter of linking the social layer of problem solving to a certain end with the technical side of, you know, game theoretically aligning all these incentives. So my question is, would governance be more efficient within any Dow as long as they spec the goal of governance as clearly as possible? And if they spec the goal of governance as clearly as possible, they're able to sort of engineer the system to work, like, game theoretically as well as it can. Isn't finding out preference a matter of best describing the goal to any governance community? Yeah, and I think that there's a lot that you can do in the mechanism and, like, with code, but there's also a lot of norms and subjective stuff that you can just, like,

write in English or in whatever language and make that the expectation of the system that we're going to behave in this way. And you can do your best to build code around that so that the process goes with that. But I believe that there's also a very important like this subjective layer that you don't want to try to write in solidity.

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