From day one, Delphi has been about bringing the full potential of prediction markets to fruition. To achieve this, we feel that it is important to know the answer to the following question:
“If prediction markets are so great, why aren’t they flourishing already?”
To anyone who puts any serious amount of research into the subject, the answer is clear. Prediction markets haven’t been able to reach their full potential because governments inevitably shut them down wherever they start to get traction. Augur’s whitepaper does an excellent job walking through some of the history of government interference in their very first page (which we pay homage to and expand upon in our own whitepaper). Long story short, governments have not been very friendly towards prediction markets, and there is no reason to expect that to change now.
However, the Ethereum blockchain has finally provided the means for this vision to be fulfilled, with or without the blessing of any given government or jurisdiction. Although we have great respect for the teams behind both Augur and Gnosis, and have been heavily inspired by their work, we find ourselves profoundly disappointed by these projects’ respective approaches. More specifically, we believe that these companies (and Gnosis in particular) have prematurely dismissed the very real risks of government crackdown, and have committed to corporate strategies which leave them vulnerable to attacks of this nature. In the opinion of the team at Delphi, it is naively optimistic to assume that governments will embrace (or even turn a blind eye to) prediction market initiatives. By adopting traditional, top-down, central-authority corporate structures, these companies may have unwittingly reintroduced all the risks of centralization, including a single-point-of-failure; they may not realize it yet, but they have painted targets on their backs, and it is likely only a matter of time before they (and their users) have to pay the price.
Upon recognizing this, we decided that we would take a different approach. In much the same way that Satoshi Nakamoto saw fit to launch Bitcoin pseudonymously, we have decided that the most prudent way to minimize the risks inherent in launching a platform like Delphi is to do everything we can to ensure that it is truly decentralized and truly leaderless, including a concentrated effort to maintain operational security and identity-related risk management. We have established and implemented a security framework that comes as close as possible to eliminating organizational trust entirely, which ensures that even if individual members of the Delphi team were compromised in some way, it would not meaningfully endanger the project as a whole.
We realized immediately that this decision would be controversial, and that many in the community would disapprove of the approach we have decided to take (at least in the early stages before our work has had a chance to prove itself in the open market). We anticipated that this would be something that many would not be able to look past, and we completely understand this perspective. But after considerable contemplation, we have reached the verdict that retaining pseudonymity, in this particular case, is the only way to properly execute the vision we have. If you are interested in reading more about why we feel this way, please see §1.4, §2.1, §2.2, §3.3.3, §188.8.131.52, and §184.108.40.206 of our whitepaper.
We have assembled a core team of developers, strategists and economists around the world who have a passion for crypto, and we have taken extreme precautions in our operational security to make sure that we’re not jeopardizing the project or vision by nurturing dependence, in any respect, on one particular individual in the organization. This is an open source project, not a company, and we do not operate in a trust-dependent framework. We intend to let our code and our work speak for itself.
If you are wary or skeptical of a truly decentralized and open-source initiative like what we are building here, and you are uncomfortable participating in a crowdsale where you don’t know the real name(s) of the founder(s), we completely understand, and we urge you to not take part in the Delphi ICO later this month. We believe that this would be perfectly rational, and we completely understand your decision on the matter.
For those of you who do want to take a chance, and invest or contribute to this project in whatever ways you see fit (whether that is sending a fraction of an ether to the FairAuction contract to secure some ∇, helping to spread the word about what we are trying to do, contributing code or peer review as appropriate, or any other form of support) we intend to exceed your every expectation, and prove over the next decade just how right you were to believe in Delphi and get in on the ground floor. For everyone else: we think you are wise to be skeptical, and we hope to meet again sometime in the future, after we have had a chance to prove ourselves in the real world.
Gnosis is a centralized organization, building on top of Ethereum but nevertheless assuming a role of undeniable protocol-level authority. We want to try something different, something that we think stands a greater chance of success, in the end: we want to launch a real dApp, sufficiently decentralized and autonomous, which could truly survive the disapproval of large governments. We acknowledge that this will make certain types of activities more difficult and serve as a disadvantage in terms of community outreach, but we also recognize the eternal truth:
No risk, no reward.
We understand the risks that we are taking here, and we intend to make sure that the community fully understands them, too. We do not want to sugarcoat things, or spend our effort trying to convince those who are rightly skeptical of the strategy we have decided to adopt. We want to be as transparent and honest as possible, every step of the way. We intend to earn the support of the community through hard work and tangible results.
Over the next week, we will be publishing a series of posts on our Medium account that we hope will clarify everything it is that we are trying to do, in a little bit more digestible of a format than a whitepaper. As a few examples, we will be providing a friendly walkthrough and breakdown of our contracts (a “code walk”), discussing some of the more interesting revelations we have had while assessing Gnosis’ design and implementation, and exploring the differences between Delphi and Augur in more depth.
We truly appreciate the support that we have already been seeing since our announcement, and want to offer our gratitude to those who have decided to keep an open mind about our project. Thank you to everyone out there who is supporting Delphi in any way — we promise you will not be disappointed, when all is said and done.