Staking Democracy: From 4-Year Voting Cycles to Long-term Policy Vision

Blockchain-based Policy Staking and Sustainable Governance

The Dilemma of Short-term Electoral Cycles

The fundamental contradiction of democracy lies in making long-term decisions through short-term electoral cycles. In modern democracies, 4–5 year election cycles force decision-makers to pursue immediate political gains rather than long-term vision. For politicians, survival in the next election becomes the primary concern. But the problem deepens when current politicians must bear the initial costs and social pain of long-term policies, while future politicians and citizens reap the benefits. This represents an institutionalized form of “present bias” and “free riding” problems from economics. Consequently, short-term popular policies consistently overshadow long-term essential policies in most democracies.

Key examples of issues caused by democracy’s short-term cycles:

• Climate Change Response Failures: While the Obama administration signed the Paris Climate Agreement, the Trump administration immediately withdrew. Consistent policy implementation needed for carbon neutrality becomes impossible
• Education Reform Delays: Korea’s university entrance system fluctuates every 5 years between exam-focused → continuous assessment → comprehensive evaluation → exam-focused, causing confusion in classrooms
• Aging Society Unpreparedness: Despite 30+ years of aging policies in Japan, the focus on elderly votes leads to increasing burdens on younger generations while fundamental structural reforms are postponed

Success Stories of Long-term Vision

The United Arab Emirates (UAE) exemplifies excellence in long-term vision execution.

The “Vision 2021” announced in 2006 set ambitious goals to become “the world’s best nation” for the 50th anniversary of UAE’s founding. Beyond this, the even bolder “Vision 2071” declared in 2017 establishes a 100-year plan for the country’s centennial. This strategy encompasses diverse areas including transitioning from oil-dependent to knowledge-based economy, space development, and becoming an AI leader.

Major long-term projects of UAE:

• Mohammed bin Rashid Al Maktoum Solar Park: 2012–2030, 18-year project, world’s largest solar power complex
• Al Maktoum International Airport Expansion: 2004–2027, 25-year project, world’s largest airport capable of handling 200 million passengers annually
• Al Wathba Desert Conservation: 2000-present, 25+ year ongoing biodiversity restoration project
• MASDAR CITY: 2006–2025, 19-year project, complete renewable energy city

These projects were made possible by a stable political system without regime changes. As a federation of seven emirates, the UAE’s ruling families of Abu Dhabi and Dubai can consistently pursue long-term visions through stable governance structures that provide fundamentally different policy environments compared to 4–5 year democratic cycles.

Evolution of Blockchain-based Democracy

Can we pursue both democracy and long-term vision execution? While democracy offers advantages of citizen participation and power distribution, its short-term cycle limitations pose challenges for long-term vision implementation.

Since its birth in Greece, democracy has seen minimal fundamental structural changes. Meanwhile, humanity progressed from industrial to digital revolution, with revolutionary technologies like blockchain, AI, and the internet emerging. Particularly with today’s real-time communication and data management capabilities, we face unprecedented possibilities to overcome democracy’s fundamental limitations.

How can democracy evolve beyond its current constraints? Transforming traditional one-time voting systems into blockchain-based time-locked staking frameworks could unlock new possibilities.

Policy Staking Protocol Design (Example)

1) Basic Mechanism

• Citizens stake “Civic Tokens” to policy projects
• Staking periods: 6 months minimum ~ 10 years maximum
• Time-weighted voting power: √Staking period × Token amount = Voting power
• Rationale for square root: Incentivizes long-term participation while preventing extreme power concentration. For example, 1-year staking receives weight 1, 4 years receives 2, 9 years receives 3, creating progressive rewards that maintain democratic equality while ensuring short-term participants retain meaningful influence
• Early withdrawal penalties: Token deductions proportional to remaining contract period (less than 6 months remaining: 5% deduction, 6 months-1 year: 10% deduction, over 1 year: 15% deduction) to ensure long-term commitment reliability

2) Reward System

• Success dividends: Tiered rewards based on project performance metrics
  * 80%+ achievement: 50% bonus on staked tokens
  *60–80%: 30% bonus
  *40–60%: 10% bonus
  *Below 40%: 30% token reduction (risk sharing)
• Long-term X Performance Combined Rewards: Additional multipliers for 3+ year stakers
  * 3–4 years: 1.5× reward
  * 5–7 years: 2× reward
  * 8+ years: 2.5× reward
  * Example: 5-year staker achieving 80% performance → 50% × 2× = 100% token acquisition
• Reputation NFT: “Citizen Governance Badges” for long-term stakers
• Policy proposer rewards: High reputation scores for accepted policy proposers
• Decision-making privileges: Committee participation eligibility based on staking duration

3) Decision Process & Continuous Participation

• Proposal stage: Only citizens with 3+ years staking history can propose policies
• Deliberation stage: Open discussion and opinion gathering among 1+ year stakers
• Voting stage: Final decisions through time-weighted civic tokens
• Implementation stage: Quarterly KPI-based performance evaluation and adjustment
• Activity maintenance requirements: Quarterly checks of project progress and direction reconfirmation votes required. Annual non-participation results in 10% civic token reduction (compounded)
• Active engagement rewards: Additional influence for regular opinion expressers and discussion participants
• New participation incentives: 18–25 year olds receive 30% bonus civic tokens for first long-term policy staking (3+ years) to encourage youth engagement in long-term social participation

4) Additional Innovation: Expertise-based Sector Governance

This system can further expand into expertise-based sector-specific policy tokens. Since no citizen can realistically possess expertise across all areas, separate policy tokens can be issued for education, science & technology, culture, foreign policy, defense, etc. Citizens can accumulate sector-specific influence through specialized staking aligned with their expertise and interests.

For example, education experts can stake in “Education Policy Tokens” to gain greater weight in related decisions, while medical professionals can effectively voice their expertise in healthcare governance. This balanced approach ensures expertise properly reflects in policy decisions while guaranteeing participation opportunities for all citizens.

Innovative Effects of Policy Staking System

This staking system fundamentally realigns society’s incentive structures. Long-term oriented decision-makers gaining greater influence is not a temporary phenomenon but the result of systematic selection. Citizens contributing to successful long-term projects accumulate decision-making power, naturally building “wise long-term vision.”

More importantly, this reward structure incentivizes deeper civic engagement. While current democratic systems don’t directly reward citizen participation in policy processes, this system ensures economic rewards and social influence for those contributing to long-term social development. This embodies the fair principle of “rewarding individual contributions to public good,” naturally encouraging responsible decision-making.

Political behavior transforms fundamentally. While 4-year cycles drive politicians to focus on the next election, this system evaluates them on 10-year outcomes. To gain long-term staker support, they’ll propose more future-oriented, sustainable policies, focusing on long-term value creation over short-term popularity. Sharing success and failure with citizens naturally cultivates responsible political culture.

Upgrading Democracy

This approach upgrades rather than replaces democracy. It signifies transitioning from reactive to resilient, popularity-driven to time-weighted governance, short-term wins to future-aligned incentives. This represents experimental attempts to create long-term governance models combining cryptocurrency, civic participation, and incentive design.

Current political systems often collapse under time’s weight. What we need are political systems that evolve and strengthen over time. Realizing these innovative ideas requires collaboration across experts and innovators from various fields.

While democracy isn’t flawless in every society, it remains humanity’s best governance system discovered thus far. Leveraging new technologies and incentive structures to preserve democracy’s fundamental values while evolving into long-term oriented democratic forms represents our era’s defining challenge.

Blockchain Governance and Physical World Integration

Current blockchain/Web3 ecosystems face similar short-term challenges. DeFi protocols focus on TVL and short-term yields, while DAOs repeat short-term decisions for token prices. Digital environments facilitate easier experimentation and iteration than physical worlds. Similar ideas are already emerging in Web3 ecosystems. Optimism’s RetroPGF represents an innovative model providing retroactive rewards to long-term public good contributors. Beanstalk incentivizes sustained participation through seasonal rewards for liquidity providers, while dYdX DAO introduced differentiated voting rights based on staking duration. These experiments all attempt to solve traditional token-based governance’s short-cycle problems.

Successful long-term governance models developed and validated in blockchain ecosystems could gradually apply to physical world political systems. For example:

1. Prototype stage: Small-scale experiments at community or city levels
2. Expansion stage: Scaling to regional government based on successes
3. Integration stage: Hybrid operation with existing democratic systems
4. Evolution stage: Gradual transition to new time-weighted democracy

Through this pathway, democracy could evolve from merely “the least bad system” to sustainable, future-oriented governance. Creating new democratic models that dissolve boundaries between technology and society, physical and digital worlds, solving humanity’s long-term challenges represents our era’s most crucial experiment.

Disclosure: Hashed has established, maintained, and enforced strict internal policies and procedures designed to identify and effectively manage conflicts of interest related to its investment activities. This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. Furthermore, references to any securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services.