Algorand Governance Feedback: Decentralization Concerns - Governance Discussions - Algorand
Algorand Governance Feedback: Decentralization Concerns
post by awesomecrypto on Apr 14, 2021
TL;DR Decentralized decision making and execution is inefficient and ineffective and poses a great risk to the Algorand growth and competitiveness moving forward.
- The goal of this note is not to claim that decentralized governance cannot be useful in any form but to encourage deeper discussion and research among the Algorand teams and the community before moving full-speed in that direction.
- AFAIK there is not enough public information about how Algorand Inc., the Foundation and network are supposed to work and influence each other. For example I asked a number of questions here.
Staking Algos is just one requirement for becoming a decision maker. It only ensures there is some interest alignment with the network success. However, it doesn’t guarantee anything about the quality of decisions or whether they are part of a broader long-term strategy. First an important part of decision making is coming up with the decisions that need to be made, which is missing and is left to proposal owners and not under a unified strategical plan. Second, decision making for a global monetary/DeFi network is a high-profile job which requires dedicated time and effort, expertise and knowledge. The majority of participants (95+% if not more) are not qualified for this role. Also the governance reward is too little for the small group of qualified participants. Third, there are too many participants, with many different backgrounds and just ensuring enough information flow so they get to a common understanding of problems/solutions is difficult (if not impossible) and a slow process.
The damage is not limited to decision making and execution but also it causes a lot of unhappiness and sadness within the community, leading to many divisions and eventually brain/money drain. No sane expert would want to waste hours and hours his/her precious time discussing basics with random people so may or may not move the needle just a little bit. As much as people get excited when sometimes the process works, stepping back there is little justification for it particularly when a centrally govern competitor (say Binance for example) can move one hundred times faster. Decentralized governance is not a goal but a means so its cost should be lowered as much as possible or even alternative approaches are used when possible.
I had the chance to work with the Dash community very closely for a few months. I observed many of these issues in practice. Dash governance benefits from interesting ideas (for example there is a treasury and the network can own companies and central entities) however it still suffers from serious issues and fails in addressing real problems effectively and quickly. The result has been that Dash is not able to gain its deserved position and value in the market even when it still provides cheap/fast(1-2s)/scalable transactions. In particular not only the community has not grown enough but there has been a huge brain drain.
post by RAIFF on Apr 14, 2021
You do realise the objective of Algorand is a truly decentralized network, right? In order to be decentralized there are consequences and it means sharing the responsibility and decision making with people that you might consider inferior or have a different opinion than yourself.
Another reason why the network must achieve decentralization is because the SEC indicated that bitcoin is not considered a security due to their decentralized nature. If all decisions are governed by the Foundation the SEC might view the token as a security and every transaction must be scrutinized and everybody vetting for compliance reasons.
post by dirac on Apr 15, 2021
Does it? Governance is about changing parameters of the protocol to be more in line with every participants values. You don’t need an MIT degree for that.
To make a point about that “elite” you’re talking about: There’s not a single currency in the world that has ever stood the test of time. These “experts” might understand monetary policies better, but they’re also more likely to manipulate them for their own gain. As far as I’m concerned, banks gambling on the market and getting bailout money don’t seem like geniuses to me.
Centralization is not the way to improve as a civilization. We need strong education with a focus on critical thinking and depolarization.
post by tebok on Apr 15, 2021
Forgive me for ignoring your other arguments for a moment, but even if it was true that 95% of the participants were not qualified for the role, as long as the number of governors is high enough, then even 5% of qualified participants may be enough to produce good decisions per the “wisdom of the crowds” principle. And we don’t even need to know which ones are the qualified participants.
By “wisdom of the crowds” I mean that if 95% of participants vote randomly (and independently of each other) while 5% actually vote for the “best” option, then with a large enough number of participants the random votes will statistically cancel each other out, while the 5% of participants voting for the best option is enough for that option to win.
Of course, it is not quite that simple in practice due to various biases or group think that can influence the 95% of participants to not vote randomly (or independently), but in my opinion that is not a good enough reason to abandon the whole idea of wisdom of the crowds that works so excellently in many different areas.
It is certainly worth trying to get the most qualified people to participate in the governance too, but in the long term I fully agree with the direction Algorand is taking in trying to decentralize the governance of Algorand.
post by Maugli on Apr 16, 2021
The real problem is that Prof. Micali didn’t specify clearly enough the SCOPE of the governance.
Its scope may be “bicycle shedding” and getting good money (Algo) for it.
post by DangerDano on Apr 22, 2021
How is Algorand (or any proof of stake based consensus) going to stay decentralized when 1 Algo = 1 Vote?
It seems entirely possible that the decentralized nature of the governance protocol can be compromised by someone (or group) with lots of money who can buy more than half the supply, essentially making them the only vote that matters.
post by Maugli on Apr 22, 2021
We can only hope that that the initial (secret, not too transparent) allocation went to parties Prof. Micali knows and trusts. Anyway, everything is on the blockchain, it should be analyzed, who is who.
A question: is it still considered a terrorist act to create and a new crypto in the US? Prof. Micali made his decisions (Foundation, Cayman Island etc) not without reason, I think. Or it is much more refined than that…
post by scholtz on Apr 22, 2021
they say that governance protocol is about managing the AERP fund… governors should have power to decide how many algos are distributed between grants and how many goes to relay nodes incentives…
governors do not decide on who receives the money… algo foundation has monopol in this… perhaps in 10 years when there will be fight only for some algos from fees, they will give it to public
so 1 algo = 1 vote means that the algo community believes in hypercapitalism… the founders of algo or early backers should decide whatever they want… they do it anyway, so whats the point to complain…
post by tebok on Apr 22, 2021
Yes, I was describing it purely in terms of “1 real user = 1 vote” (not 1 algo = 1 vote). But I should mention that in some conditions this criteria can be relaxed without losing the “wisdom of the crowds” benefits - best example being the betting market (i.e. prediction market).