IOTA — To Burn or To Build
An attempted summary of where the community is at regarding the upcoming Treasury Fund vote.
Given the current situation, I think it is important for as many of us within the community to communicate about how the active discussions are moving forward regarding the IOTA Community Treasury. Primarily as well, the upcoming initial vote associated with what happens to the Treasury Funds. The below is my attempt to help keep the broader audience updated as the community moves forward.
We had a great community discussion on Discord the other today about the upcoming vote. It was a great kick-off meeting to get things rolling and start to collectively achieve a forward direction. The primary focus was how should the community vote on whether to Burn the tokens or instead collectively take control of the Treasury Funds as a community.
Here are some bullet points from the discussion. Please keep in mind it was 04:00 am while attended the discussion so I may have missed or forgotten something. I am sure others will post updates of the current situation and summary.
What will we be voting on?
The upcoming community vote is not necessarily to Burn the tokens or create a DAO, but rather to vote for A) burning the tokens, or B) the community takes control of the Treasury Funds. A key notation is that it is the “community” that would take control and manage the fund.
So what does controlling the Treasury Funds mean at this present time? This may not be the current consensus but I believe it means that the community decides how to use those funds. The options are basically endless and up to the community to decide together. It could be creating a single DAO, multiple DAOs, airdrops, burning a portion of the tokens, funding development, marketing, or a combination of some or all of the options proposed. Personally, I believe that the active community that is engaging to move this agenda forward has a duty to the broader community to ensure all voices are heard and have an opportunity to present their ideas and options. I do believe that we are one of the best communities in this space and should we all vote to take control of the Treasury, we can certainly execute control of the funds in a decentralized, fair, and mature manner. In a way that represents the consensus of the entire community. This may be in the form of a DAO, this may be in some entirely different digital decentralized form that doesn’t exist today, but for sure it will be built to represent the consensus of the community.
The point is if we decide not to burn the tokens, we will then work together and decide how to use the 65 Ti. Again, the use of the funds would be decided by the consensus of the community. That means, if the community wants to spend it in one go, it gets spent. If the community wants to build a legacy endowment that may last 100 years, then so be it. Or, the community may vote to AirDrop the tokens in order to get a small quick increase in their bags. The point is, if we vote to not burn the tokens then the community decides collectively and within a decentralized way what to do with them. Note, the community would build this fund control system decentrally and digitally.
How is the “initial” vote going to be completed?
It is good to understand that the initial vote (either burn the tokens or give control to the community) will not be the same voting system used to control the Treasury Funds. Why is that? To truly develop a system on top of the Tangle that conducts fair, secure, and non-gameable voting, it will take an immense amount of time and funds to do so. If the community votes to take control of the Treasury Funds we will then have the available capital and time to build such a voting system. Some ideas that are floating around for this type of voting system (specific to the community controlling the Treasury Fund) is 1) voting done with lock periods, 2) multiplied voting with different periods of lock time allowing users to amplify their votes, 3) Decentralized Identification (DID) voting (though may not be available for a few years), others unknown and or not invented yet. We tried to focus on what needs to be completed before the “initial” vote and not get too hung up focusing on the later voting mechanisms. The present and current most important issues are whether either A) we burn the tokens which would then conclude any forward movement on building a community-run decentralized voting system, or B) we choose to take control of the Treasury as a community and then fund the development of what would become one of the best and most fair voting systems in this space.
Additionally, should the community vote to control the Treasury, the voting mechanism that is put in place thereafter, which decides how the funds will be used may not even exist today. We as a community will certainly not rush the development nor take it lightly. For now, we need to trust each other that if we decide to move forward with control of the Treasury we can rest assured, together as a community, we will build one of the best decentralized voting systems to date.
The community does not currently have access to the Treasury Funds and nor can we until we conduct the initial vote. So how can we fairly and securely conduct this initial vote without designing an in-depth voting system? We need to ask ourselves, do we wait for years of crowdfunding and having developers donate their free time, or do we conduct an “initial” vote with the best available means to get the direction we need? Because after the “initial” vote, if the community votes to take control of the Treasury Fund, we would then get access and have the capital to build a fully decentralized voting platform. So the first and initial question is, To Burn or To Build?
The answer to the above was discussed in the first meeting. The current consensus (which is not set in stone) is to conduct this vote by using the Firefly wallet with a 1 token = 1 vote. This again, would not be used later on as to how to use the Treasury Funds, this initial method would simply be used to allow the community to decide do we Burn or do we Build.
With regards to voting on Firefly, we can ask what are the risks involved in this initial vote?
A. Can Exchanges Dominate the Initial Vote
Exchanges will not take part in the initial vote because we would be voting using the Firefly wallet. For an exchange to vote using the Firefly app they would have to remove their multi-million dollars worth of IOTA’s, go through all the multi-signature releases and other process steps, take away all their safeguards, and then move those funds to a Firefly wallet. This is just not going to happen. If the vote results with we Build, then there is an extremely small risk an exchange would go out of their way (potentially a small exchange) to game the vote in favor of a proposal they submitted. This however is down the road and shouldn’t be our focus today. By using Firefly we mitigate that risk for the current initial vote. The community can later build a voting system that mitigates any exchange vote gaming later on to protect the fund.
B.Can IOTA whales game the vote?
We have to understand that there is no perfect system. We can only seek to balance the benefits and risks in order to offer the best opportunity for a fair and decentralized vote. With the initial vote, we have to ask ourselves “what would a whale gain from gaming the vote?”
Game the Vote to Burn the Tokens —
Price — If we look at what can be gained by each, we can assess the weight of the risk. In most situations with community voting, the incentive to game the vote is done so seeking financial gain. So the question becomes how much financial gain is thereby available by Burning the Tokens. The 65 Ti is roughly around 2.4% of the total supply. Given crypto-economics “given a fixed supply, the less supply the higher the value of the token”.
So how much would this increase the price, or pump the price if any? Well, theoretically it could be 2.4%. Given that the market generally moves anywhere from 1% to 20% on any given day, burning the Tokens would barely move the price. Potentially, investors would even see that burning the tokens as a negative because they would know that the 65 Ti would not be potentially used to expand the IOTA ecosystem and thus increase the quality and demand for the token.
Ideology- If not price then why else would someone want to game the system and burn the tokens. It would be based on an ideology standpoint regarding the immutability philosophy of distributed ledgers. Would someone actually go out of their way to dominate such a vote strictly based on one's ideology? Potentially, but I find the risk extremely low.
Game the Vote to Build!
Price — Really, the only incentive to game the vote in favor of taking control of the Treasury Funds would be for financial gain in two ways. 1) they would want to give the community the opportunity to vote on the funds and expand the ecosystem through development projects and marketing which would increase the token price. 2) a person would want to game the vote in order to take control of the Treasury so later they can submit a proposal and then attempt to gain that vote and get control of the entire 65 Ti. However of course the community will build a voting system that would prevent this.
If we look at the initial vote between Burn and Build there doesn’t seem to be that much incentive either way. Given this variable the attempt to game the system is low. There seems to be a consensus already within the community that we all want to take control of the Treasury. We have seen this through different polls taken online. There isn’t a consensus “yet” for what the Treasury funds will be used for, or how they will be governed, but I think overall this is the direction the community wants to move in. To reaffirm this consensus, we are running an online poll to get a pulse of where the community currently stands on the situation.
That poll can be found here please vote! Poll Link
The conclusion really is that there isn’t a high incentive to game the system for either of the options. If the community chooses to take control of the Treasury then there will be a risk to gaming the system. So if the vote ends to build, the community will have to build an extremely secure, fair, and sound voting system with nearly absolute risk mitigation concerning manipulation.
With regards to time, and for the community to gain clarity on how to move forward, the first step is to initially vote for which direction we are going to move in. With that said, the current method discussed is Firefly and using token holdings to represent voting. This method has already been thoroughly thought out by the IF which will give the best and safest voting approach with the current technology that is available. Further, there is a Discord channel on the IOTA Official group under the category GOVERNANCE / #voting-tech. Here, the community and the IF will collaborate together and discuss how the initial vote will occur. This will be a transparent and vetted process. Everyone is welcomed to participate in the discussions!
Does the initial vote initiate any legal recourse?
The immediate answer is NO! The IF has stated that when they decided to take these actions they were not taken lightly. They spent a lot of time assessing the situation and if any legal consequences that could possibly occur. As stated, they have sought out legal consultation to ensure the process is completed in a legal manner. What does this mean for the community?
Whatever structure, entity, or multiple entities are built if the vote concludes that the community takes over the Treasury, the build DAO or structure will be fully decentralized. It or they will only live in the digital space, on the Tangle, and within smart contracts. Such a DAO or structures thereof will not be held to any legal jurisdiction standard. It or they will not reside “within” any national jurisdiction, but only within the Tangle run by community nodes throughout the world.
Whatever decision is voted upon, to Burn or to Build, the actual execution of such decision will not be completed by the IOTA Foundation. Instead, the decision will be completed by the community node owners. As of course, the node owners will be exercising the will of the community, and specifically, the outcome of the initial vote.
Can this lead to a fork?
This has already been answered as the fork technically already occurred. When the network was upgraded to the Chrysalis protocol. A fork called IOTA AS was split off from the current IOTA dag. Community node owners were faced with a choice to either run the current IOTA or the IOTA AS dag. At present time all node owners decided to run the current IOTA dag and as of yet no community members have run or maintained the IOTA AS protocol.
It is known that DLTs with decentralized voting protocols have the possibility to fork. To my personal knowledge, I believe this primarily occurs over protocol decisions which happen to become highly contentious or with protocol update errors. The likelihood of a fork occurring and creating such indecision and riff within the IOTA community over the 65 Ti is highly unlikely.
For the “initial” vote do we need to know “exactly” what and how the community-controlled Treasury will look like?
There is no consensus necessarily about this point. As the community progresses forward some members are going to actively try and gather a consensus. Hopefully, we can have an agreement as to what the Vision is and what potentially the Values might look like. What would the voting system look like, what structures would be in place, etc? Everyone is welcomed to join the Discord channel #Governance/governance-vision and help us, as one community, seek to find an aligned idea of what we can build together.
Hopefully, we can accomplish this or get close to something before the initial vote. Again, personally, I hope the community doesn’t get too hung up on the granular technical details of how the community would manage the funds but trust that if we do decide to manage the Treasury fund it will be done so following the consensus of the community. As Eric Hop says, “There are no problems, just solutions.”
This is a great opportunity for the IOTA community to come together and collectively make a big decision that has the potential to grow the IOTA ecosystem in so many ways. We can create, build, fund, market, airdrop, or some mixture of all of these once we control the Treasury Fund. The community, with the Treasury, can grow the IOTA ecosystem in ways the IOTA Foundation is limited and incapable of. In my mind, and I believe in our community, that our aim should be to complete the next steps in IOTA’s future in a manner that reflects everyone's consensus.
Everyone is welcomed to support and participate in the upcoming discussions. The next Governance Voice Call will be held on the IOTA Discord server on June 25th at 4 pm CET time. We plan to actively engage in these calls weekly, or bi-weekly. Also, all are welcomed to discuss within the IOTA Discord #Governance channel and help take the next big step. Do we Burn or do we Build!
I will be writting more articles to try and educate and give information to the community the best that I can. I
Please vote on Straw Poll. This will absolutely help everyone as we move forward.
JD Sutton
DeepSea
