Niran Babalola: Making Progress The Status Quo

Panvala’s founder gave a talk on Slate Governance for Effective Token Votes at ETHDenver. Here’s some key takeaways.

Photo by @EthereumJoseph on Twitter: “The Token Master himself, @niran, deep diving on holding effective token votes.”

On Problems In Our Ecosystem

“The core problem that we’re facing is that the ecosystem funding is unsustainable. A lot of the common infrastructure that we all rely on is being funded by one team or another that raised funds in a one shot deal. And they’re spending down those funds and eventually they’re going to run out.

The second problem that we’re facing is that the incentive system that allowed us to build Ethereum in the first place doesn’t really work for improving the system over time. It’s easy to get people to start a new network, but it’s not easy to get people to improve an existing one. So people with ideas about how to scale the network, instead of cooperating with the existing community, sometimes they splinter off, create their own new incentive systems and build something separate that competes. If we want to be able to make more progress together instead of splitting apart, we have to solve that problem.”

On Decentralization

“Our community strongly believes in decentralization. And decentralization is a good thing. I’m not anti-decentralization. But a lot of people don’t have the same definition of decentralization. If you ask two different people, they’re going to give you two different answers. The only thing we agree on is that if we see a system where chaos reigns, then that’s decentralized. But it doesn’t have to be that way. To me, what decentralization means is that you have an emergent order rather than a top down order. And if we can build decentralized systems that facilitate that emergent order, we could probably get a lot more work done together than we’re currently getting done right now.”

On Deadlocks & Brexit

“Deadlocks are a problem that occur when you’re not just dealing with simple binary decisions where we try to choose between path A or a path B, but in the real world there are so many decisions that we can make together and so many options that we can choose from. One example of this right now is Brexit in the UK. There’s no majority to stay in the European Union. There’s no majority to leave the European Union with no deal. But there’s also no majority for the deal that’s actually on the table. So they’re stuck in a deadlock and nobody really knows what the path forward is. Building governance systems that avoid deadlocks helps cooperation continue over time, and we need to design systems that can achieve that.”

On Sustainable Ecosystem Funding

“What we’re trying to do with Panvala is build a sustainable flow of funding for work that makes Ethereum safer. That work currently has a difficult time getting funded and we want to make sure it’s easy.

Our goal is to reach equilibrium. For every token that’s going out of the system as a grant, we want one token to be going back into the system as a donation. And when we reach equilibrium, that’s a level of cooperation that we can sustain indefinitely. It’s not that people are speculating on this token, hoping that it’ll increase in value. It’s that we’ve organized a community of donors, organized a community of workers, and brought them together so they can fund the work that they want to do together.”

On Governing Loyalty

“We believe that instead of governing assets on chain, you should govern loyalty. We’re not pooling some funds in a smart contract and determining how to govern it, we’re governing how we interact as a community together.

Panvala doesn’t need your money. What it really needs is your power. We want you to use your loyalty to make donations happen to Panvala. And the way that you do that is by being loyal to the merchants, companies and individuals that make donations to Panvala.

There’s a lot of money that companies currently set aside, whether it’s your local coffee shop, your cloud services, or your favorite luxury car brand, that have a marketing budget that they spend to get you in the door. And they’re giving that money to Facebook and Google to make that happen. With Panvala, what we can do is, instead of spending that money with Facebook and Google and making them richer, we can get companies to put money towards a goal that we care about. To fund work that we care about, and go into the door for that reason. We want to give the same ROI that you get from paying for ads for Facebook and Google, but for putting donations to the cause that we care about. So the more demand there is to make contributions to the system, the easier it is to fund the work that we’re trying to do together.”

On Slate Governance

“The way Slate Governance works, is that there’s one slate of proposals that can execute each quarter. A slate can have as many proposals as you want to include on it and there can be as many slates as you want competing with each other to be that one slate that is going to execute that quarter. But at the end of the day, the one with the most votes is the one that is going to execute.

Secondly, if there’s only one slate, then there’s no vote at all. If there’s no competition to be that slate that is going to execute this quarter, just execute the one that seems to be the consensus of the community and move forward without a vote.

Thirdly, the identity of the recommender of each slate is emphasized in our voting process. Instead of it just being a purely technical decision, we care about who’s making the recommendations for these slates in our system.

Lastly, any time you’re recommending a slate of proposals, you have to stake tokens on that slate. And any of the losing slates for that quarter are going to lose the tokens that they staked on that slate. So that’s how it works at a high level.”

On Off-chain Consensus

“If none of the slates get 50 % of the vote, that’s when the top two runoff kicks off. We eliminate all of the slates that didn’t get either the top amount of first choice votes or the second top amount of first choice votes. We take all the ballots from the people whose first choice was eliminated, and then we count up their second choice. And that’s how we determine who wins out of the remaining two slates. So we think that kind of coerces people into reaching consensus off chain rather than relying on the outcome of a vote to determine what the consensus actually was.

The outcome that we desire from that, is that really consensus is built before votes ever happen. If you look at a lot of the existing systems where decentralized governance is happening, the conversation really starts when the proposals hit the chain. That’s when people are trying to figure out what they’re going to vote for and how things should proceed. We don’t think that’s the right way to do things. We think it should be more like the philosophy behind Plasma, where you set up a set of rules where you can coordinate off chain and you only go back to the chain when someone has gone terribly wrong…We want consensus to be formed off chain, not on.”

On Making Progress The Status Quo

“In this system we rely heavily on incumbency. So when we’re deciding which slate to vote on in the app, we highlight who the incumbent recommender is. If you recommended the last slate that was successful, the next time you propose a slate we’re going to make sure the community knows that you’re the same person that recommended the last slate. And that’s important to us because it establishes a different status quo from what usually prevails in decentralized systems.

In most systems the status quo is stasis: It’s hard to make changes in most decentralized systems because by default nothing happens. But in slate governance, there’s a different status quo. The status quo is continued progress along the same trajectory that the community has been moving on. Because when voters are comfortable with the status quo, they vote for the incumbent. Not for nothing. We think we can get more sustained progress when the status quo is progress. Not stasis.”

Watch Niran’s full talk here.

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