Liquid Governance in Tezos

How Tezos’ governance structure mirrors a self-adjusting and self-reconfiguring cross between Representative Democracy and Direct Democracy

William McKenzie
Apr 29, 2019 · 6 min read
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We’ve seen Tezos branded as having a Delegated Proof-of-Stake (DPoS) consensus algorithm, and many people seem to believe this as being true. However, when we delve into the nature of Tezos’ features, there are key aspects that are native to Delegated Proof-of-Stake (DPoS) protocols, which Tezos does not share.

Jacob Arluck of Tocqueville Group has gone in on this topic of “Liquid Proof-of-Stake” (LPoS) and these attributes, but, let’s not just simply ascertain why Tezos is not DPoS. Rather, let’s explore how Tezos embodies the concept of Liquid Governance and how it is able to flow between two forms of democratic type governance, cycle to cycle.

Democracy’s Beginnings

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Democracy traces its steps back to Ancient Greece, where it was initially conceived. At the epicenter of it all, Democracy’s true introduction began in Athens, Greece. The concept was far more primitive in nature as there were several barriers which impeded the impact the “common” man and especially women had in the political process. At the time, only a mere 30% of the population could vote, with a barring on women, foreigners, and slaves being completely excluded from the political process within Athens altogether. Only a male citizen within Athens had the unique opportunity to be able to vote.

Fast-forward to more present times, the introduction of democracy as we know it today on a contemporary paradigm, began taking form within the United States by the Founding Fathers. The Founding Fathers rejected the notion of “classical democracy”, otherwise known as direct democracy, which encompassed the democratic practices that were originally introduced within Athens, Greece around 500 BC. This rejection was formally put into place by the signing of the historic Declaration of Independence.

These ideas were further reinforced in James Madison’s Federalist №10 in 1787, where it was emphasized government was meant to be a natural aristocracy rather than a republic built upon the equality of all, where the “elite” were entitled to a place within Congress and would represent the public.

“Pure democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security, or the rights of property; and have, in general, been as short in their lives as they have been violent in their deaths”. — James Madison

As time passed, social barriers to political participation began to contract with the passing of the 19th Amendment in 1920, effectively giving women the right to vote on executive positions and legislation. Although, it took significant time after this for African Americans to gain their right to participate in the political process, as they were historically disenfranchised from participating with discriminatory practices such as literacy tests, and poll taxes prior to voting. With the passage of the Voting Rights Act of 1965, African Americans were eventually given the opportunity to participate in the political process, outlawing the discriminatory practices of literacy tests prior to voting in the southern United States. With this outcome and the 26th Amendment, allowing all citizens who are of at least 18 years of age to vote, our contemporary paradigm of democracy began to usher and take form.

Liquid Governance

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A formal focus on governance is a cardinal attribute of Tezos. Every blockchain has some kind of governance, ranging from the informal and chaotic to forms so centralized they may as well be cartels or cults. Why do we refer to Tezos’ consensus as “liquid”, when it is clear that we have delegates? Why is it not simply Delegated Proof-of-Stake (DPoS)?

Delegated Proof-of-Stake functions similar to representative democracy and is the very idea that the Founding Fathers believed in after subsequently signing the Declaration of Independence, in July of 1776. Voters choose a fixed number of delegates (politicians) for a fixed duration of time (term) to govern on their behalf. These politicians are supposed to weigh in on competing interests and select the most suitable decisions for the allocation of resources and establishing laws. This has proven to be an efficient and scalable way to govern, but it has its drawbacks.

On the distant side of the spectrum, there is pure “liquid democracy”, which mirrors direct democracy, where voters vote on every single issue directly, without an elected politician weighing in on competing interests. This is the same form of democracy that the Founding Fathers rejected and came to light from its origins in Athens, Greece. Not without its drawbacks, this has proven to be inefficient and historically costly, however, expresses the sheer will power of the voters against disintermediating social layers.

Why this Shape of Governance is Ideal

If this shape of governance is to be deemed as “ideal”, the question arises to the curious observer, why have we not seen more of this? We see representative democracy almost universally within political systems across the world. The things that detract from this shape being well accustomed, is that it almost never scales and requires a tremendous amount of coordination and authentication.

Within modern times, however, we now have a massively connected network where individuals can trivially and cheaply coordinate, but more importantly, retain an indisputable cryptographic key. Now, suddenly, coordination is made easily possible by combining a distributed ledger to a highly connected network. There is still, however, requirements of each voter to be engaged in the governance process, and conversely, act diligently.

It is in this sense, that Tezos has accomplished a remarkable feat. It is able to flow between a representative democracy type governance structure (DPoS), in the form of choosing a baker and move on a sliding scale to pure liquid democracy, where a baker with a single roll can exercise their views forthright while having to remain diligent and educated on each amendment proposal. Tezos’ governance structure is “liquid” in the sense that its configuration flows between the two forms (representative and direct) from cycle to cycle. In this way, the governance structure is self-adjusting and self-reconfiguring, flowing from cycle to cycle between the two ends of the spectrum.

Democracy Blended with Technology

Essentially, what we have with Tezos is something that has never been accomplished before and represents the epitome of technology’s advancement towards being a harbinger in the evolution of democracy. Tezos contains a morphologically fluent governance structure and for the first time in history, these technologies have converged to construe the possibility of this kind of topological liquidity in governance.

At some point in the future, being brought on by “social inflection”, if Tezos is successful in demonstrating a stable, efficient Commonwealth and economy, people around the world are going to ask why they need politicians, and quite frankly, currency by fiat. Acquiring a sovereign piece of territory and managing its entire economy and Commonwealth in this way, would signal a revolutionary possibility to the end of a rule by charisma and psychopathy.

The nation’s wealth is significantly attributed to governance. There are some small countries with little to no natural resources like Singapore and Belgium, yet, they thrive. Additionally, there are others that are abundant in natural resources like Venezuela and Ecuador that are ridden with poverty. The difference mostly boils down to governance.

“What but design of darkness to appall? If design govern in a thing so small”. — Robert Frost, Design


Tezos represents a harbinger to democracy’s next step of evolution, containing a morphologically fluent governance structure, allowing it to flow between two forms from cycle to cycle. It is in this sense, that the best of both representative democracy and pure liquid democracy (direct democracy) can converge into one through technology, amalgamated into a truly “liquid” governance structure.

Some questions may arise to the intelligent observer, for how do you really test a governance structure that is so far ahead of its time? It is in this sense, you are essentially flying blind. For, a country survives when it’s ideology thrives, if it dies then that nation is no longer alive.

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