Decentralized governance and governance tokens


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@andrarchyandrarchy

CEO of Koinos Group, creators of the Koinos blockchain

I’m Andrew Levine, CEO of Koinos Group, and in the latest episode of Our Decentralized Future, I speak with Adam from gFam about decentralized governance and governance tokens.

One thing I want to make clear from the start is that each project approaches governance in its own way, ideally suited to its system. So any attempt at generalization will miss the mark when applied to a specific project.

My views are generated from my narrow perspective and reflect the system we are developing (Koinos) more than anyone else, so don’t interpret anything I’m saying as an attack on someone’s implementation. other. I have been in this space for a long time now and like anyone else who has been around “the block” it means I have a lot of scars and personal experiences that seriously color my analysis.

Tokenization bias

In our discussion of governance, I saw the convergence of two trends that I have observed over the years;

  1. the tendency to try to improve a system by making it more complicated
  2. and / or by creating another token.

Don’t get me wrong, tokens are amazing and can be used to solve an endless variety of problems, but that doesn’t mean they are the right solution for. all problem.

However, creating complexity is almost never the good solution. Unfortunately, tokenization creates an incentive to “complicate”. The purpose of tokenization is to allow price discovery. If a positive price is discovered, it can create a windfall for the token creator. that’s why How? ‘Or’ What you throw your token is so important, and why there was no ICO or pre-mine for Koinos.

UNdesign solutions

It concerns governance because it creates an incentive to design a solution instead of designing a solution by the UN. When building a system, there are often ways to solve problems not by adding components, but by removing them (“undesign”). In general, removing components is better than adding them, as this creates a simpler system which generally results in greater efficiency, performance, and scalability. More importantly, it makes the system easier to understand, which is essential for developers to maintain and upgrade the system.

When governance is resolved by creating an additional system, that system can be symbolized, which can be used to enrich the creators of that system. So that means there is an incentive to add complexity rather than remove it. That’s not to say it’s never the right solution, just that the first thing people should do when analyzing a given tokenized solution is to look at the incentives of the people creating that token and the nature of it. of the launch to ensure that there are no perverse incentives.

Scalability and governance

The example I give in this episode of an unconventional governance solution is Koinos modular scalability. When people talk about blockchain governance, they almost always talk about how hard forks are approved. But in these discussions, they rarely talk about the solution of removing the need for hard forking!

On Koinos, thanks to modular scalability, a majority of the fundamental blockchain logic is implemented in smart contracts, which means that the community can upgrade these contracts and propagate them through the p2p network, thus changing the behavior. blockchain on the fly and avoiding the need for hard forks in the first place.

In other words, the primary focus of most governance solutions is a non-issue on Koinos. We solved the problem, not by creating a new system, but by eliminating the cause of the problem in the first place.

Of course, the governance of Koinos is extremely important, but the beauty of modular scalability (aside from the technical advantages) is that it will “free up” the governance of the blockchain to focus on improving the functionality of the blockchain. , allowing Koinos to improve, faster.

To watch more episodes of Our Decentralized Future, be sure to subscribe to the YouTube channel and follow us on Twitter; OurDecentralizedFuture, André, Adam.

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