Governance Part 3: What Did We Learn?
Last time, we’ve talked about the problem with blockchain governance and had a chance to see what can be learned from other projects. Today we’ll take a look at what some of those problems are, and how Color plans to tackle them.
#1 Too Few Block Producers and you’re going to have a bad time.
In the army they call this the four eyes principle or individual separation. The less people involved in a particular activity, the higher likelihood of coercion. It is much more likely to have bad actors in a system that allows concentration of power. Also, the fewer people means that they are much more likely to come to a conclusion and push ahead and potentially make bad decisions. Also, having block producers being selected randomly and for other reasons than just how much coin they have staked with them is healthy for the ecosystem. In Color, there are more than twice the amount of Block Builders than EOS’s Block Producers, and with far less power. We believe this design is healthy for the ecosystem to have them not be what Color Coin is, but rather perform an important service and compensated accordingly.
#2 Leaving the Governance decisions in the hands of the Block Producers is no bueno.
Recently projects like EOS have been having issues with fungibility. That is to say that transactions they approve or disapprove of are simply at the hand of the 21 Block Producers. Are you a rich person who angered the Block Producing community? Watch out, you might get blacklisted. Block Producers have to keep up with Blacklists to ensure that wallets they don’t want to be transacting with the network. If you don’t keep up with these blacklists, you may even be facing a lawsuit, as we saw earlier this year. With Color, there will be no Blacklisting. As it stands, EOS suspends wallets all the time. Fungibility is extremely important to us. There will be no blacklist to update and weekly ‘fungibility restriction’ meetings between our Block Builders.
#3 Having a Foundation as part of your governance model if fine, but their funding needs to be revocable and community controlled.
Foundations can be an important part of the equation when choosing the direction for the coin and how to direct its resources of devs and marketing and any other efforts and partnerships it may want to pursue. However, when Foundations run a muck it may be a large arduous process until the community annexes them at large. With a treasury system, as soon as their proposals don’t reach the threshold to get funded, and something else gets more support, it is goodbye almost instantly to that foundations funding.
#4 Too few “branches of government” and you lose checks and balances
Just like in state governments, centralization of power can be a problem. After all, what good is a decentralized currency if the mechanisms that govern it are centralized and don’t accurately represent the stakeholders across all levels? The problem with many existing cryptocurrency systems is that only a few voices really have a say. In EOS, what the Block Producers say, goes. In Bitcoin and many other projects, many people feel that the Core Dev teams are often too powerful.
How then, are we supposed to fix this? With the Color governance the treasury makes it easy for vast amounts of the community to get their voices heard and ideas funded. The entire currency isn’t at the will of the Color Committee. Not only that, but the funding comes from the treasury as well. The Block Builders who provide consensus also have a voice as core members of the community, but their ability to govern is limited such that their voters must continue to agree with their decisions in real time, else be replaced and the Treasury budget will be directed elsewhere.
Have any questions? Stay connected with us through our Telegram channel.
Have a Colorful Day :)
Join Our Chatroom to Learn More!▼