SUPERALGOS PROJECT

The Good Governance Citizen

When voting, have the long-term project goals at heart.

Julian Molina

Published in

Superalgos | Algorithmic Trading

13 min readFeb 8, 2023

Governing a permissionless project running a decentralized meritocracy that improves itself is challenging. In this article, I explore the responsibility of contributors regarding governance, the desirable conduct, and how to deal with bad behavior. I also provide context and background on why we have this kind of governance system. It’s my first deep dive into this topic, and I hope it helps shape our participation in governance from now on.

There are plenty of books, papers, and tons of development in the crypto space dealing with decentralized governance. However, finding an existing model suitable for Superalgos proved impossible when we researched the topic early on.

The Superalgos Governance is unique in that it combines both algorithmic and human decision-making. At this stage, we rely primarily on human input. Humans participating in the collaboration must make value judgments and cast votes to decide how rewards get distributed. In a more mature state of the social trading network, we will likely shift to a predominantly algorithmic solution.

We rely on human input because the project must grow in many directions.

Using an algorithmic solution would require a monster of a model. It would need to precisely weigh the value of contributions in marketing, business development, software development, design, trading intelligence, community building, social behaviors, and all other growth dimensions that we wish to incentivize. And we would only use it temporarily during the adolescent stage of the project.

At some point, the above elements of the collaboration will represent a small portion of rewards as the network will look to incentivize primarily signal providers and providers of other services that may emerge as we mature. These services — available only to contributors — drive mass adoption.

In other words, we are in a transition phase.

Why Active Participation is Conceptually Crucial

An open collaboration decides on its value system early on. The first few participants set the tone, a value scale, and nurture a culture. The culture developed early on then serves to guide the collaboration as it grows.

As the project advances and more people join, we run the risk of getting our culture diluted.

It’s a natural threat. In the beginning, when the project doesn’t have that much to offer, it tends to attract like-minded people that buy into a vision and share the advertised values.

However, as the project starts offering liquid incentives, an opportunity for speculation, or a working product or service, it becomes interesting to a wider audience. Latecomers join the project for different reasons than early adopters and do not necessarily share the values or embrace the original culture.

The governance process establishes who gets rewards and a voice guiding the project forward. The latter is the main reason why early contributors need to participate actively.

It is in our interest to give a voice and vote to people that adopt the culture and values as their own. That guarantees that the project will not mutate into a dystopic crypto scam, a centralized endeavor prone to censorship, or a captured project benefiting a few interest groups. Any of those nightmarish scenarios would send the token in an unrecoverable spiral and destroy the value proposition of the collaboration.

Another Parallel With Bitcoin

If you look at the token distribution schedule with a halving every six years, you may find the similarity with Bitcoin’s halving intriguing. This type of distribution schedule has two main effects:

In both Bitcoin and Superalgos, the schedule provides great incentivization power in the early stages of the project, when you most need it to attract the first few followers or contributors. It was, in my view, the motivation for Satoshi to set the schedule with a halving every four years.

In our case, the token carries weight for governance too. The effect of an early halving magnifies the power conferred to the first group of contributors. It’s no accident. As stated earlier, the early group of people must become the long-term leaders of the project.

In a way, even though holding Bitcoin doesn’t confer you governance rights over the network, I’m pretty sure Satoshi wanted to get cypherpunks heavily invested early on — before other groups — for similar reasons. It is cypherpunk principles that guide Bitcoin to this day.

The Challenges of Governance

Governing a human collaboration where there’s money and power involved is a delicate task. The main worries are attacks by malicious actors and typical human misconduct: attempts at gaming the system to gain an advantage.

We already have experience on the first case. A malicious actor once attempted to exploit a bug in the governance system to multiply his token power and use it to obtain more rewards. The community detected the attempted exploit, confronted the malicious actor, and, given his unrepentant response, decided to ban his User Profile and remove it from the governance workspace.

The second type of cases are a lot more nuanced and, thus, don’t offer such straightforward solutions. The line marking undesirable behavior may be blurry, and people may interpret situations differently. So let’s explore that line and the camps lying on either side.

Good Behavior Leads to Achieving Project Goals

Let’s start by defining what is the desirable behavior.

Whenever I discuss incentives, I point to the fact that a good design of incentives leads to achieving long-term goals.

The next goal of Superalgos is to conquer the social trading market. We are building a network designed to dominate and put every other inferior model out of business.
To become the dominant network, the project must be at the end of the disruption curve. We must leave no space for further disruption.

That is why our product is free.

Free products avoid the race to the bottom scenario, with companies competing by lowering prices. Our offering is free-of-charge to disrupt that race, going straight to zero cost to the user.

That is why we are privacy-focused and put users first.

User-centric brands always dominate their space. Think of Amazon, for example. They became the everything store by cutting down prices at the expense of sellers and offering same or one-day delivery in a trade off for harsh work conditions. They do whatever it takes to give customers what they want: cheap and fast stuff.

That’s why we’re open-source.

Because open-source code offers the required transparency to build trust and because open-source collaboration enables a collective intelligence that may outgrow the intelligence within companies, who must pay for the resources they hire.

That is why we strive to become as decentralized as possible.

Decentralization reduces attack vectors and broadens the base of invested people willing to fight for the project when we grow enough to become targets. It makes us more resilient and censorship-resistant.

That is why we distribute the token among contributors.

This fair launch model for the token is at the core of building an organism that improves itself. No one can compete with this ultimate form of sustainability. Companies need to pay to improve products and services. We can iterate indefinitely at zero cost. Regular open-source projects have limited capacity to attract contributors. We incentivize contributions with our native token. No one can compete with our tokenized collective business model.

Check mate!

These are core features of the project which enable us to compete and dominate our space.

The governance process is the tool we have to manage the distribution of the token — the most crucial feature of the collaboration and design of incentives — directly affecting our chances to achieve the long-term goal.

The desirable behavior of people participating in governance should thus lead to:

a wide distribution of the token to get lots of people invested;
a fair distribution of the token so that we maintain peace and nurture goodwill in the community that shapes our value system and culture;
a correct appraisal of the value added by contributors, as each token we put in circulation must be backed by real value.

Those are the goals of the governance process.

We must all behave in ways that lead to achieving those goals.

Bad Behavior Disrupts Everything

Anything that slows us or prevents us from achieving a wide and fair distribution with a correct appraisal of value goal goes against the interests of the project.

We need to gauge the behavior of each participant in the governance process under that lens.

For instance, if someone attempts to game the system to obtain more rewards than they would otherwise deserve, they would be going against the three:

they’d be preventing a wide distribution by hoarding to-be-distributed tokens;
they’d be spurring unfairness by taking tokens others deserve more;
they’d be overvaluing their contributions.

That is why active participation in governance is crucial in practice and not just conceptually. We must guarantee that the distribution of the token follows the principles that lead to achieving the long-term goal.

The Right Framework for Voting in Governance

The governance process is guided by collective intelligence.

We use the brain power and judgment of a growing group of smart people sharing values and long-term goals to find the correct parameters for each distribution.

Each of us produces a set of parameters — our educated guess of how all rewards should be distributed. Then, the average of the inputs is computed as the final set of parameters.

For the averaging mechanism to work, there are two critical requirements:

All participants should vote in all categories.
Your votes should reflect an honest appraisal of the value added.

If you vote for a single category that you may be particularly interested in, and throw in all the token power you have, then you will distort the averaging mechanism.

I tend to believe that such a way of conducting votes would still average well in a more mature state of the collaboration when there are thousands of voters. But when we’re still a few dozen contributors participating in the distribution process, this doesn’t work.

At this point, there are two main dimensions we need to vote on:

The distribution of rewards among pools.
The distribution of the Teams pool among all contributing teams.

The first dimension doesn’t require much work. It’s just a subjective appraisal of how we should distribute rewards in the following three categories to maximize the project’s chances of success:

How much we decide not to distribute. It’s crucial for the overall appraisal of the value added to the project during the month. Did we reach the maximum potential of the collaboration at the current stage? If not, then some tokens should remain in reserve.
How much goes to each governance program. Each of the programs is necessary for success. We need to dynamically balance rewards according to the current state of the community and the project as a whole.
How much goes to contributing teams. We need to evaluate the work done, which requires at least scanning all PoVs.

Everyone should be able to participate in pools voting to help get to a collective decision with minimal effort.

Voting for teams requires a little bit more work: you need to read and understand every PoV. Still, it’s not a big deal as long as we have a couple dozen concise reports.

Similar mechanisms apply here.

You should vote for all teams doing an honest appraisal of the value each added to the project.

If you vote only for your team, you are impeding the correct functioning of the averaging mechanism. In this scenario, it’s not a collective intelligence deciding how to distribute rewards but a competition among teams. Whoever has more token power may cast more votes for their own team and win.

That, of course, does not lead to achieving the project’s long-term goals.

For that reason, we need to discourage and even fight that kind of destructive participation.

Gaming the System

Because the governance system leaves a considerable portion of rewards to be distributed by subjective human measures, it is prone to gaming and cheating.

The line between an honest misunderstanding and an attempt at gaming the system may be blurry. We should assume that newcomers will have a hard time understanding how the system works and how it’s intended to work. The motivation for writing this article is, precisely, to make things as clear as possible.

There are obvious ways to game the system, or at least try to.

For instance, inflating your team rewards by driving as much token power as you can afford to your team’s position without consideration for the value created by others. Of course, if you use all of your token power, you won’t have enough to drive to your claims. But still, you may use as much as you can afford. Or you may collude with other people to administer the group’s power and facilitate the exploit.

Another example is claiming more rewards than you are entitled to from the team you collaborated with. This sort of misconduct tends to become an immediate issue, as there is a counterparty involved that won’t happily let that pass.

The Honest Assumption

We designed the governance system assuming that most participants are honest, have the interest of the project at heart, and are willing to defend the project.

In that sense, dealing with people participating in governance inadequately, requires social measures.

It’s pretty much how things work in society. We assume that the majority of individuals are honest, that they have an interest in having a functioning society, and are willing to defend it.

For example, if someone harasses or assaults a bystander, we expect someone or even a group of people to step in and stop the aggression. That’s how society defends itself from sociopathic behavior. We all look after each other.

When that basic quality of society degrades for whatever reason, you get all sorts of dysfunctions and end up with dystopian scenarios.

The same applies to our governance.

When someone is not acting in ways conducive to achieving our long-term goals as a project, we should intervene. Standing by does nothing to correct the problem. If we don’t act, we risk sliding into a dystopia.

We don’t want that.

How to Deal With Undesirable Behavior

First, we must ensure that the person in question understands what we expect from the governance process. This article may be used as a reference to educate participants. As always, we assume goodwill and allow plenty of opportunity for people to correct course.

What if people know but still try to game the system?

There are several mechanisms built into our governance that we may leverage.

For once, we need active participation from all contributors. If everyone is aware of the issue, the collective withdrawal of support for the offending team should drastically diminish their potential to distort the distribution of rewards. The power of malevolent individuals is dwarfed by the collective power of honest participants.

Then, there are negative votes.

I would consider this a tool of last resort to deal with bad actors. The premise is that if someone persists in misbehaving, honest actors may cast negative votes to shut down the distortion introduced by bad actors.

Going back to the analogy with our every day environment, asking someone to read this article is equivalent to verbally asking someone to stop misbehaving and explaining why their conduct is inappropriate. The collective removal of support is like ostracizing sociopaths who misbehave frequently — a natural form of social punishment. Negative votes are equivalent to judging bad actors and throwing them in jail.

Frequently Asked Questions

I amassed significant power and wouldn’t want to overpower other participants. Should I use less power for voting so that everyone else may participate at the same level?

No! We’re not the communist party. We are a meritocracy. You have power because you’ve earned it and because the community has decided to trust you with that power. You should use all the power you can afford for voting. It’s part of your duty as a community member and contributor. You are here to lead the project. Own that responsibility.

But… but…

No buts. Repeat with me: me-ri-to-cra-cy. Now sing that mantra in your head while you meditate for ten minutes. You get to choose the beat.

I don’t always understand everything described in every PoV. How do I assess the value of all contributions?

It’s not easy. That’s precisely why we outsource the discovery of the parameters to collective intelligence. Feel free to talk to people — ask questions — to improve your understanding. In general terms, contributing towards the critical path is more valuable than contributing to lateral stuff. Feel free to revisit the articles about why we reward value creation and what is a contribution that adds value. Then make your best guess and go for it.

If you find that you’re definitely not qualified to vote for teams, then it’s fine if you decide to stay out altogether.

I’m afraid of how I vote for my team. I don’t want to be perceived as a bad actor.

There’s nothing to be afraid of. Make an honest appraisal and vote accordingly following the principles discussed in this article. If you’re comfortable explaining your thought process to any community member who may ask, then you’re being honest, and that’s what counts. No one has the correct answer… it’s all a personal value judgment.

I have a few questions about governance and voting!

Feel free to ask in the Superalgos Token group. I encourage the community to openly discuss this article and anything else you feel would be constructive.

Mastering Contributions

You just read an article in the Mastering Contributions series exploring some of the crucial aspects of the Superalgos Collaboration. To continue your journey learning about how to contribute to Superalgos, just keep reading: