Community Stake Governance Model

How can Proof-of-Stake blockchains become more decentralized by broadening the set of constituencies given a voice in governance?

New York Society for Ethical Culture Town Hall Meeting, NYCDOT

This blog outlines the Community Stake Model. This model emerged out of design and conversations between the Regen Network team and the Cosmos/Tendermint team, specifically through conversations with Jae Kwon and Jack Zampolin.

Problem Statement

Conventional Proof-of-Stake approaches to governance may fail to represent all users effectively due to the challenge of moving beyond a one-token /one-vote model. In such a model, the same token that serves as the “virtual ASIC miner” to secure the network also serves to allow the token holder to vote on chain upgrades. This is an enormously elegant and efficient solution. Unfortunately for applications outside of securing a network for a virtual currency, this may be problematic because it constrains the set of governance participation to those with the technical and economic ability to buy and stake tokens. Other network participants should be represented in governance in order to ensure decision-making that is in support of the community as a whole. In this case, we will assume that governance runs the spectrum of proactive amendments and upgrades to a blockchain (for instance, enabling new functions) to dealing with bugs, hacks, and other emergency issues. In both cases, having broad buy-in and input from users is desirable because ultimately, a permissionless public network blockchain is competing to most effectively provide a public good, and therefore governance is one of the most essential features to attract users.

In the case of Regen Network — which works with farmers and land stewards around the world — we understand that many of our core users will not be in a technological or financial position to participate as token holders, perhaps for many years. By that time, the price of tokens could place the very user groups that we must engage out of range. Governance of the Regen Network’s public and sovereign ecological blockchain by and for users is a key part of securing the network against censorship, building trust and utility, and creating a global ledger of ecological health.

Therefore we propose the following solution:

An amount between 33+% and 67+% of staking tokens can be granted in the genesis block of a new blockchain zone to a single or several Governance DAOs. The tokens, upon launch, can be considered locked and not-exchangeable. Of course, in the instance that this DAO or DAOs control 2/3rd +1 and vote to unlock the tokens, that can happen.

For different uses and blockchains, this can enable enough liquidity for price discovery, as well as for new independent validators and delegators to join and provide network-securing work, and ensure that a community of stakeholders has substantial say in the governance of the chain.

This governance power can range from a 1/3rd +1 veto power to full control over governance with signaling from other community members. This is assuming close to 100% staking, which may happen as derivative tokens (the ability to trade a staked token) are made possible by advancements in the staking economy — otherwise governance power of the community staking pool will be even greater.

This model can be further elaborated on by creating sub-addresses and allocating tokens to constituencies represented by governance DAOs. Each DAO can be tailored to its particular user groups voting preference, from liquid democracy, to traditional one-token/one-vote, to representative democracy, or DAOstack-style governance by prediction market.

Regen-Network-Specific Design

Regen Network has four main goals for allocating tokens for non-market based allocation:

1. Network security
2. Full stakeholder engagement and alignment
3. Full decentralization
4. Reinvestment and support for network growth

Using the same staking model as Cosmos, we will allocate 35% of the initial token supply as tokens locked to addresses managed by DAOs to user constituencies.

Our current plan is to allocate to the following constituencies:

• Land Stewards. These are the users actively stewarding the earth and are essential to ecosystem repair, regeneration, and the real-world function of the network. This is a constituency that has been oppressed, overlooked, enslaved, and generally excluded from governance for far too long, which has significantly contributed to environmental degradation, coordination issues, and the general prevalence of the prisoner’s dilemma and tragedy of the commons in relation to ecosystem management. Ensuring that land stewards have a seat at the governance table is essential for the long-term success of Regen Network, and indeed, the health of our economy and planet.
• Science Community. Science is at the core of Regen Network. Science is how we generate trusted consensus about the state of the world. Methodologies for monitoring and measuring, quantifying, and qualifying our world are core to how our species creates meaning, makes decisions, and builds trust. This community is also essential for the healthy operation of the network and must be integrated into governance to ensure the system is healthy and robust.
• Developers and Engineers. From the blockchain to the open-source hardware and sensors, the engineers who build the system are often times overlooked. While this community does have representation in the crypto space in the form of the validator community, we also feel it is important to leave an open door for passionate developers who have no access to initial private sales and token offerings to participate in the governance of the system.

There may be other key constituencies as well. There will be a discovery process to ensure the appropriate stakeholder groups are represented, and there may be an allocation locked aside for future constituencies.

The network will launch with the following rules hard-coded into the DAOs at the protocol levels, which would mean network-wide consensus would be needed to change this.

• Locked Tokens: the initial tokens cannot be transferred from the address. They can be delegated to any validator address and can be used in on-chain voting.
• Block rewards and fees can be re-staked or distributed according to each DAO’s internal governance.
• It will be the role of Regen Foundation to ensure that each constituency is engaged to form the DAOs and design their internal governance structure.
• We will start with a general framework of one-organization/one-vote. Only legal organizations that have gone through a Know-Your-Customer process can participate. Proof of alignment must be tendered in the form of mission statement or legal charter with bylaws that demonstrate commitment to the direction and mission of Regen Network (ecological regeneration). Organizations wishing to join will have to work for a period of six months towards providing value to the network (documenting a land regeneration program, sharing a science methodology, developing key elements for the community, etc.) before gaining a vote.
• After this initial filter, we assume each DAO will formalize its own system for on-boarding new members. Each DAO will be considered mature and ready for operation when governance code is audited and shown to be adequate, and ten or more members have joined the DAO.

Accomplishing the design goals we set forth:

• Network security will be increased when there are DAOs that are governed by users with clear parameters to distribute tokens widely to validators.
• This model ensures that when there are network upgrades, all major stakeholders in network health have a voice. It also ensures that, in the case of issues (like the DAO Hack), all voices can be part of governance and signaling to choose the appropriate path forward.
• As noted in the security point, we can increase the distribution of tokens to validators, thus making the network more secure. In addition to this form of decentralization, we also further decentralize decision making beyond just token holders to key user groups.
• 100% of the block rewards and fees accruing to these DAOs will be distributed by the vote of the DAOs to projects deemed important for that constituency’s use of the network.

What happens before the DAOs are mature enough to participate in governance?

We have growing experiments to watch at the moment with MolochDAO and others in the ethereum ecosystem to glean best practices and learn from mistakes. Even so, it is not a trivial undertaking to grow the capacity of what may be non-technical community members

By default, if DAOs are not mature enough upon network launch, Regen Foundation will maintain custody of the keys for these constituencies DAOs and spread delegations as evenly as prudent.

During the interim “inter regen,” the Foundation may sit out of governance decisions deemed important for the token holder community to sort out on their own. Regen Foundation’s legal mandate will be to cultivate a strong community around the governance of the DAOs, and to ensure there are user interfaces and education for these groups.

The above criteria mean that it may be at least six months after initial main net launch until a community governance DAO is up and running, and that until then, Regen Foundation will be delegating these tokens.

This slow approach to building and onboarding is key with constituencies not fluent in the blockchain space. The potential for these groups to manage substantial block rewards and fees and participate in governance should be ample enticement for engagement. Regen Network’s design makes it possible for truly decentralized governance to be possible, and ensures that this decentralization can grow increasingly robust. It also leaves substantial liquidity via the remaining 65% of the token supply, and space for market mechanisms and a vibrant community of token holders to participate in securing the network.

My disclaimer should be that although others have helped evolve the thinking, I should be held responsible for anything considered problematic about this approach.