A Brief Discussion on the Governance of Public Chains

BTC pump to 108k.

During the weekend meeting with the community chain project, I discussed my thoughts on the governance issues of public chains.

First, let's talk about why the so-called public chain governance issues arise.

BTC is also a public chain, but there are no so-called governance issues. Why? Because BTC has no governance, at least not the on-chain voting governance mechanism that people usually think of.

It is generally believed that within the entire BTC ecosystem, there are three forces that compete and achieve balance with each other, thus restraining and counterbalancing one another. These three forces are: the maintainers who hold the authority to modify the client code; the miners who control the power to produce blocks on the blockchain; and the holders who possess BTC ownership and can vote with their feet.

If code maintainers arbitrarily merge and release code rules that have not achieved broad consensus, they will face resistance from miners who refuse to adopt that version of the software. In severe cases, this can lead to holders selling off their assets and ultimately rejecting the project. In addition to resistance and fleeing, miners and holders can also choose to support software versions released by other maintainers, resulting in a certain maintainer team and its products being abandoned by the market.

If miners violate the consensus and attempt to seize control of the code, they will face unanimous opposition and condemnation from the developer community and coin holders. The developer community and coin holders can abandon the chain hijacked by a minority of miners and continue to operate the original chain that aligns with the community consensus. However, the dark forest rule tells us that this only applies when the total hash power controlled by the usurping miners is less than the total hash power of the miners supporting the original chain; otherwise, the usurping miners can leverage overwhelming hash power to attack the original chain and completely destroy it.

This shows us the dialectical relationship between the gun and the pen. The gun represents material power and has a decisive role. But who commands the gun? The pen. The pen is not just a passive implementation of codes, but actively shapes the consensus of the community. Therefore, all struggles ultimately boil down to ideological struggles. How can the pen command the gun? The key lies in the fact that the pen represents the hearts and minds of the people, embodies the broadest consensus, and reflects the ideals of the vast majority of the community.

Who are the people of the community? Are they the holders of coins? Not entirely. Those who support BTC and hold coins are the people of the community; those who oppose BTC and hold coins are traitors and the targets of the struggle; those who support BTC and do not hold coins are friends and part of the united front; those who oppose BTC and do not hold coins are enemies and competitors.

Among the people, there are different proposals regarding the technical route. As long as everyone supports BTC, it is an internal contradiction among the people and can be negotiated and reconciled. However, if someone opposes BTC or even aims to overthrow BTC, they become the target of the people's resolute struggle and dictatorship. For those under dictatorship, they must be firmly suppressed, deprived of their freedom of speech, and expelled from the community. In simple terms, the constitution only protects the rights of the people, while traitors do not have the qualifications to enjoy the rights that only the people deserve.

Therefore, it is clear that any ideology will firmly reject those who do not agree with or oppose it. The most important thing for a writer is to figure out how to unite the largest number of people, win their support, and enable the community to gain the most people, thereby achieving the greatest strength.

Internet platforms are a combination of the pen and the gun, leading users to choose between enduring or fleeing in anger. Satoshi Nakamoto's clever design separates network operation from code development, allowing the two to mutually constrain and balance each other. More importantly, it prevents either from forming a monopoly: open-source code gives everyone the opportunity to establish new codebases, diverting a broader consensus; the joining and exiting of the computing power network is completely anonymous and requires no permission, along with the randomness of the PoW block generation mechanism, making it difficult for network nodes to operate and blockchains to be monopolized.

However, when we discuss non-PoW public chains, it is difficult to completely adopt the governance-free model of BTC.

In simple terms, PoW is the only solution to the Byzantine problem. When we remove PoW, we can only introduce certain governance mechanisms to compensate for the issues caused by the absence of PoW.

For example, regarding the PoA (Proof-of-authority) used by the Jouleverse chain, it is necessary to conduct authenticity and independence checks on the accounting nodes to avoid the classic sybil attack problem.

Qualification review will inevitably raise the entry threshold, and it cannot be completely permissionless like PoW. It can only be said that in order to ensure the maximum possible degree of decentralization, the threshold for this qualification review must be low enough, but it should not fall below the minimum safety limit.

As for whether such a chain can still be called a public chain, this is purely a matter of conceptual definition. There is no intention to engage in such purely conceptual debates here, as it is of little significance.

Back to the essence. There is another issue, which is incentives. PoW not only ensures a very low barrier to entry without permission (the only requirement is having money to buy equipment, plus a little bit of technical knowledge), but also takes on the task of distributing BTC as incentives to miners. PoA does not have this automatic incentive distribution capability, so governance work is also needed here to regularly evaluate, count, and distribute incentives based on contributions.

Company management, in a sense, involves evaluation, statistics, and motivation. When it comes to how this is done in the context of blockchain, it has become a new topic.

Copying the corporate system may lead to centralization, which can result in corruption and dysfunction, leading to single points of failure. Going completely decentralized relies on community awareness and initiative, which can be particularly inefficient, resulting in a complete loss of timeliness, much worse than the real-time incentives of PoW.

Many successful blockchain projects also adopt a combination of a company (financing and management entity) and a DAO (token holder community), such as Uniswap and Aave. Even Ethereum, whose main driving organization is the Ethereum Foundation, is essentially a centralized company. However, this may not be suitable for public chain projects that require a higher degree of decentralization.

Perhaps it is necessary to combine top-level decentralized governance with organizational management modeled after the corporate system. For instance, a board of directors could be established at the top level, but the board would not have decision-making power based on capital contributions and shareholding ratios as in corporate systems; instead, it would be elected by community votes. Below the board, starting from the CEO and various executives appointed by the board, the organizational management methods of the corporate system would still be used, with defined positions and personnel, assessments, and incentives. After all, this structure is the easiest for most workers trained in modern corporate systems to understand easily, preventing them from falling into confusion about who they are, what they should do, and what results they can achieve after their efforts.

Perhaps such on-chain companies can be referred to as DAOs or something else. However, practice always precedes theory. The governance forms suitable for blockchain are still on the path of exploration, with a long way to go.