The Problem With BlockChain Governance
Color Governance is a complex process and so far, even in our White Paper, we have only scratched the surface. First of all, what is cryptocurrency governance? Cryptocurrency governance mainly comes in two forms:
How the rewards are divided, and how that is handled.
How code changes occur in the “core” code.
This is the second in our Governance series of blog posts where we will see what we can learn from other projects. There are projects that have taken huge risks, some within the field of cryptocurrency governance, and most have not succeeded. But in designing a new governance structure, it first behoves us to take a look at some of the reasons they might have failed.
1) EOS — But, But, But…. You Promised?
Quite simply, what Vitalik feared came true. How do you avoid vote buying? If this is to continue to be an unregulated space and you don’t want to have vote buying be an option, than you better figure out a way in your code or governance system to prevent this. Simply having governance participants sign a non-binding promissory note that “they promise they won’t do something” is not going to cut it. Last month there was EOS vote buying for their block producers. EOS essentially has a situation where the 21 Block Producers control everything, and you either like your overlords, or you leave. That isn’t governance!
2) Cardano — The Foundation Breakup
IOHK and Emurgo just left the Cardano foundation due to the lack of progress. Now this doesn’t necessarily mean that governance as a whole has failed, but it just goes to show that governance is hard, and getting it right isn’t something you can do by accident. In this case, if they were using a governance system that took into account community voting, and the funding was given directly from a monthly budget that could be revoked by the community as a whole, this would have never been as big of an issue as it was. The voters would just simply start to see that this wasn’t a good idea and not fund any proposal by the foundation to receive funding. This is Color’s Approach.
3) Other Coins — They all have their problems
Color is under no illusion that good governance will be an easy task. Quite the opposite, in fact. Bitcoin has forked so many times that even its forks have multiple forks now. Ethereum still has Ethereum Classic, and another contentious fork on the way. So what can we do to solve this governance crisis? We need to apply what we’ve witnessed to see what works and what doesn’t, quite simply.
What Have We Learned? In the next blog post we will cover these topics in more detail:
- Too Few Block Producers and you’re going to have a bad time.
- Leaving the Governance decisions in the hands of the Block Producers is no bueno.
- Having a Foundation as part of your governance model if fine, but their funding needs to be revocable and community controlled.
- Too few “branches of government” and you lose checks and balances
Extra Credit: Forks may not be a bad thing, but we should try to prevent them.
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Have a Colorful Day :)
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