A Deep Dive Into EOS Governance
A story of broken constitutions, broken block producer agreements and stolen accounts? Or a rough start to the future of governed blockchains? One of EOS promises is the introduction of onchain governance, but how succesful has it been so far?
The promise of EOS governance
On March 16, 2018, Block.one released the ‘EOS.IO Technical White Paper v2’. EOS governance is described in the following way:
Governance is the process by which people in a community:
1. Reach consensus on subjective matters of collective action that cannot be captured entirely by software algorithms;
2. Carry out the decisions they reach; and
3. Alter the governance rules themselves via Constitutional amendments.
Point 1 describes the ability to vote and decide on community matters. This means that token holders have the ability to vote on the road EOS (or any blockchain using the EOS.IO software) is taking, the ability to vote on various, sometimes hard, decisions and the ability to take action against non-complying actors in the EOS ecosystem.
This also means that EOS has a governing body that rules on disputes, the EOS constitution states that this governing body is ECAF, which assigns its own arbitrators to rule on each dispute. The block producers execute all of ECAF’s rulings. Token holders can file claims against bad and/or non-complying block producers, get help with stolen accounts, and much more.
Point 2 describes the ability of elected block producers to carry out decisions, either the result of a community vote or referendum, or the result of an arbitrator order.
Point 3 describes the possibility to alter the constitution, possibly even completely replacing the constitution. At the launch of the EOS mainnet all parties agreed on a constitution, naming ECAF (EOS Core Arbitration Forum) as the organisation to resolve disputes on the EOS blockchain. You can find the constitution here.
In order to alter the constitution, the following process will have to take place:
1. Block producers propose a change to the constitution and obtains 15/21 approval.
2. Block producers maintain 15/21 approval of the new constitution for 30 consecutive days.
3. All users are required to indicate acceptance of the new constitution as a condition of future transactions being processed.
4. Block producers adopt changes to the source code to reflect the change in the constitution and propose it to the blockchain using the hash of the new constitution.
5. Block producers maintain 15/21 approval of the new code for 30 consecutive days.
6. Changes to the code take effect 7 days later, giving all non-producing full nodes 1 week to upgrade after ratification of the source code.
7. All nodes that do not upgrade to the new code shut down automatically.
These promises were unique to EOS, untrodden territory in a vast landscape full of ungoverned blockchains.
The current state of EOS governance
The launch of the EOS mainnet has not gone without problems, but how bad were these problems, and could they have been prevented?
It started off with stolen accounts, as a result of scams and theft, leaving 7 individuals without access to their EOS on the mainnet. The top 21 block producers at the time unanimously voted to freeze the accounts the affected accounts, without an official order from ECAF. This polarized the community, resulting in plenty of people questioning the integrity and level of decentralization of EOS governance. After the freeze of the accounts the block producers filed a dispute against themselves, in order to have their actions reviewed by ECAF. The actions were deemed just by an (emergency) arbitrator, and the freeze of 20 more accounts was ordered, sparking even more controversy, as no evidence that these accounts were in any way compromised was presented to the community.
This was followed by the sudden appearance of block producers not complying with the the block producer agreement. This raised another question: if a block producer is not even capable of hosting a website before registering themselves as a block producer, how did they get so many votes? Many of these block producers are still active today, seemingly untouchable, as long as the whales behind these block producers continue supporting them. The appearance of these block producers, and the inability to punish them for their non-compliance, has further divided the EOS community, with many prominent people in the community expressing their dissatisfaction with the current state of EOS.
There have also been various discussions about ‘vote buying’. The EOS constitution forbids this:
“No Vote Buying — No Member shall offer nor accept anything of value in exchange for a vote of any type, nor shall any Member unduly influence the vote of another.”
But when can something be considered vote buying? When a block producer does an airdrop? When a block producer rewards users for using their platform? Although many have expressed their opinions on the matter, nobody has been able to give a clear answer to these questions yet.
How EOS governance can get improved
There is plenty of room for improvement, but what changes could have the most impact? We believe these are the areas where major improvements can be made:
The lack of proof for the freeze of the accounts has shown that the arbitration process is not as transparent as some would have liked. The lack of information about ECAF and how they function can also be contributed to the poor preparation of ECAF. ECAF is however updating their website (which can be found here), which currently contains all previous arbitrator orders, a list of all personnel and more. More transparency is however desirable, when it comes to presenting evidence for certain orders. More information on personnel is also desirable, as there seems to be a demand for this.
The creation of an exact replica of an official (off-chain) ECAF order, resulting in a lot of confusion, has shown the flaws in the way official ECAF orders are given. ECAF has acknowledged this flaw and has created a way to verify orders on-chain. This method works for now, but a new, on-chain system to verify and receive official ECAF orders could help a lot.
Most token holders aren’t very familiar with how EOS governance works. This has lead to plenty of misconceptions and has also caused some to even suggest completely removing the governance side of EOS. These suggestions are obviously ridiculous and better education about EOS governance, and how it works, could help reduce the amount of repetitive questions and outrageos suggestions, that are currently filling various EOS related Telegram channels.. Good and widely available resources are always valuable.
Although the article might sound very critical, every launch has it’s own problems, and so far, no critical bugs and/or exploits have been found. EOS governance may lack teeth at the moment, and ECAF should probably have been prepared better, but all things considered, EOS governance still looks very promising and can still solve some big problems ungoverned blockchains are currently facing. After all, complete decentralization causes more problems than it solves.