Ethereum is facing a situation of internal and external troubles.
The second largest public chain of the market value, external, EOS, Tron and other new-generation public chain catch up; internal, community governance problems, the trend is full.
Compared with external competition, the chaos inside Ethereum is even more deadly, because it not only delays the development progress of Ethereum, but also leads to the serious loss of Ethereum developers, the reduction of total nodes and the loss of computing power. Up to 50% compared to the highest point.
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As the controller of the Ethereum community funds, the opacity of the Ethereum Foundation in management and project investment has also been widely criticized and questioned by the community. For example, the foundation “fostering tigers” and the internal incubator chain project Polkadot have become one of the Ethereum competitors.
What is more serious is that for the Ethereum community, the funds managed by the Foundation are unsustainable. Once they are exhausted, they will face the problem that the development and upgrading of the underlying agreements will not be sustainable.
To solve this problem, a new proposal was proposed to provide developers with a continuous development funding chain through the inflation funding model, which is to issue additional Ethereum block rewards.
Kevin Owocki, founder of Gitcoin, believes that this is the most efficient and sustainable financing model that motivates developers to continue to support and maintain the open source community.
How do you motivate developers to contribute? This is not only a problem with Ethereum, but also a concern for all underlying agreement public chain projects.
Ethereum Foundation's organizational structure is chaotic and encounters a crisis of transparency
In the past few weeks, this topic on how to fund developers has spurred intense debate and discussion among members of the Ethereum community.
On the Ethereum platform, fund management is mainly handled by two agencies: one is the Ethereum incubator ConsenSys in Brooklyn, and the other is the non-profit Ethereum Foundation in Zug, Switzerland.
However, the work of the Ethereum Foundation is not doing well. In fact, the Ethereum Foundation is facing a crisis of transparency.
First, Eric Hub, the EthHub community founder and EricHub founder, tweeted the transparency of the Ethereum Foundation. He believes that the foundation should disclose the number of employees, organizational structure, average employee income, annual expenditure, etc. in the form of quarterly reports. Basic data within.
This move has been responded to by other community members.
Financial reporter Camila Russo believes that the foundation should publish a report on the disclosure of total assets and use of funds, and the report requires an appropriate audit.
Faced with doubts, Ethereum Foundation researcher Justin Drake replied that the Foundation has 100 employees and has a member structure chart, including employee compensation, operating expenses and project funding. The annual expenditure is about 2000. About 10,000 dollars.
The organizational structure of the Ethereum Foundation, which was exposed on Justin Drake’s tweet
However, this structural chart not only failed to quell the outside world's doubts, but even caused new problems. Some netizens have proved that this picture is "expired", which is probably the situation of the Foundation six months ago (September 2018). In addition, there is no breakdown of the $20 million expenditure.
Aftab 'DCinvestor' Hossain, a member of the Ethereum community, believes that this member structure map is more like a relationship diagram. There is no direct supervision and supervised relationship, and further explains the chaotic management structure of the foundation.
Partner of Primitive Ventures, one of the investors of the Ethereum project CELER and KyberNetwork, believes that the Ethereum Foundation has a disorderly organization and lacks transparency. She fired on the Twitter to Aya Miyaguchi, chairman of the Ethereum Foundation, and asked the Foundation to disclose the financial and financing processes.
She said that according to the reliable sources she received, the Ethereum Foundation employs 1,000 people – far more than the number of employees on the payroll.
However, the Ethereum Foundation has not responded so far, and still gives the outside world an organizational disorder, no performance system, and no impression of decision-making mechanisms (technical decisions, operational decisions).
For many community members, the Ethereum Foundation's financial situation and resource allocation process “is a black box, creating unnecessary drama and speculation.”
“Ethereum aims to undermine the existing model of human cooperation through the symmetry of information and the certainty of operations. Then we should lead by example and start implementing new paradigms.”
In addition to the opaque use of funds, the Ethereum Foundation also has a lot of problems in project investment. For example, the number of projects invested, the criteria for selecting projects, the specific investment amount and related details, the community members do not know.
The subtle relationship between Polkadot and the foundation of the cross-chain project on Ethereum is also a reconciliation.
This promising blockchain project, Polkadot, is considered a strong competitor of Ethereum, while the Ethereum Foundation has donated $5 million to Parity, the founding team of the “competitors”.
Not only is financial support, Aragon, one of the Ethereum ecological governance projects, also announced at the beginning of this year that in addition to supporting Ethereum, it will also support Polkadot, which will release AragonChain, a parallel chain project based on the Polkadot protocol.
The Ethereum Foundation’s practice of supporting all competitors has caused dissatisfaction in the Ethereum community. Ameen Soleimani, CEO of Ethereum community and SpankChain, suggested that Aragon should be restricted to the development of Polkadot.
Soleimani pointed out that Aragon received various funds from the Ethereum community and other aspects of support, but now it is necessary to build an AragonChain on the Ethereum competitor Polkadot. Many of the Aragon token holders are interested in the Ethereum ecology. Fang, Aragon should be asked to focus on the related development of Ethereum.
Inflation financing establishes a sustainable financing model
In addition to the questioning of the work of the Ethereum Foundation itself, the cryptocurrency bear market, which was affected by the plunge in the price of the Ethereum, also caused the fund of the Foundation to shrink significantly.
The transparency of the Ethereum Foundation and the confusion in investment management make it impossible to start thinking about how funds should be managed and how the source of funds should be resolved.
There is a view that Ethereum should seek help from the wider community to make up for the lack of funds.
According to Lane Rettig, the core developer of Ethereum, for Ethereum, the highest priority should be “improving funding and funding, seeking a sustainable financing model”.
Keit Owocki, founder of Gitcoin, further proposed the Ethereum Improvement Agreement ERC 1789. If it passes, the Ethereum block rewards 10%, and 20% of the increase (transaction cost + block reward) as the ecological development fund.
He believes that "if we can build a sustainable long-term approach to funding public goods and the Ethereum ecosystem, then in theory, it can last for decades instead of years."
Note: EIP is the abbreviation of Ethereum Improvement Proposals, which is the Ethereum improvement proposal (recommendation) used to determine the future development direction. As long as it is related to the future development of Ethereum, any community member can use the EIP template to propose it. In this way, it is possible to effectively prevent future technological trends from being concentrated in the hands of several developers, but open to the public. If during the discussion, more people need to be consulted, the details will be defined in the ERC (Ethereum Request Comments), as long as they are passed, they will be officially listed in the list, finalized as EIPs.
Inflation financing means that the value of the token will be diluted, which will damage the holder's economic interests. So how do we motivate people to contribute to the common interests of the core agreements?
For example, the fragmentation or plasma technology expanded in Ethereum will, once successful, bring a 10% value increase to Ethereum and a value of approximately $3 billion for Ethereum tokens.
If the Ethereum holders can believe that the upgrade will increase the Ethereum by more than 10%, then they will be willing to pay about 10% of their Token, which means that 10% of the Ethereum will be issued. For those who contribute to the upgrade of the agreement.
This is similar to the function of taxation, where the state obtains funds by taxing individuals and investing in common infrastructure (such as roads and libraries) that cannot be done independently by individuals in society.
The drawback of Ethereum's current fund management model is that the funds that the foundation is allocated for one-time allocation are limited, and as long as Ethereum is still operating, its underlying agreement will always need to be maintained and upgraded. After you finish using it, where should you go?
And considering the current development progress of Ethereum, the coming of that day may not be too far, so by that time, this inflation financing model may be the best alternative to providing a capital flow for development.
Unlike the existing foundation management model, inflation financing has a continuous source of funding, is more decentralized, flexible, and the amount of potential rewards that can be obtained is also very large.
Anyone in the community can submit an agreement improvement proposal, then the token holder will vote, approve or reject based on the voting result, and then decide how much the specific bounty is. After that, new tokens are cast and awarded to developers.
In fact, the inflation financing model is nothing new. At present, the public chain team has adopted this model to fund development. The most famous ones are the blockchain project Tezos and the decentralized cloud computing blockchain project led by a16z DFINITY (currently the main network has not yet online).
According to Tezos' official Medium article, Tezos uses inflation funds to reward upgrade proposals in the agreement.
In the Tezos Recommendation, a very interesting concept is mentioned, “financing innovation” , which promotes financial incentives for innovation by writing bonuses in the form of rules into the protocol code. In this way, a protocol can be defined by unit tests and automatically reward those code proposals that pass the test.
How much should developers spend to make a living?
In fact, how to motivate developers to contribute and develop the underlying public chain is a long-standing issue. Every once in a while, it will be taken out and discussed once.
Kevin Owocki, the promoter of the proposal, also admitted that it was his original purpose to spark a wide-ranging hot debate.
In his view, although open source software can generate $40 million in value each year, the sustainable development and maintenance of open source software has always been a historical legacy, and there is still no effective economic incentive model.
Ethereum, with a market capitalization of more than $18 billion, has fewer than 30 core code developers. The picture shows some core code developers.
65% of open source projects in the world have only 1-2 maintainers. In good cases, you will receive funding from some rich people. In most cases, developers use weekends and evenings to work.
For example, the well-received privacy agreement Mimble Wimble and its token, Grin. This legendary anonymous founder, without pre-digging, without ICO's privacy currency, is hailed as the fairest next-generation bitcoin.
However, what you may not know is that no financing or ICO means that developers have little source of funding to support their lives.
In fact, as early as last September, before the Grin main online line, the developer of the agreement Mimble Wimble had sought donations on its official forum and Twitter, aiming to provide the salary for the only full-time developer at the time.
Grin officially said that the only full-time developer is starving because he has no salary.
Balance co-founder Richard Burton once expressed his solidarity, saying that although Grin is one of the most exciting projects in the blockchain industry, he can't even get enough donations to support a full-time developer. The capital allocation of this industry is really terrible.
As of January this year, this fundraising campaign for developers only reached 10% of the target amount. In this regard, Angin, the chief developer of Ignatus Peverell's Grin, said that he was really disappointed with the industry.
He believes that "I have learned a lesson in this industry, and the fraudulent project that does not do things is better. Maybe 20% from financing directly is the only way to get a piece of the mining industry. If everyone It’s so greedy, then the industry really deserves to go into a long and difficult winter. The industry needs more creative work, and if everyone’s goal is to ask for it, then the bull market will never come.”
It can be said that Grin is a completely community-based operation model, and each time the developer fund can only be launched through the community to provide financial support for developers in the form of donations.
Fairness and how to balance the financing of the founding team has always been a concern in the encryption industry. On the one hand, we don't want developers to get involved in the project ahead of time, the project can be more pure and fair. On the other hand, we know that the perfect operation of the agreement requires development investment.
In other words, you can't want both a horse to run and a horse to graze.
On the reverse side of Grin, the privacy token Zcash, the team implemented the “founder reward” in the mining allocation plan. In the first 4 years of the project, 20% of the block rewards belonged to the Zcash team and 80% belonged to the miners. After the first 4 years, 100% of the reward will be allocated to the miners, which means that 10% of the total supply will be allocated to the Zcash team.
Zcash's distribution method is considered to be a violation of the typical characteristics of deblocking, privacy-oriented and anti-censorship blockchains, and has been widely questioned.
However, Kevin Owocki, the sponsor of the proposal, said that he was inspired by the Zcash case when designing the system for the Ethereum community.
In fact, in addition to the community-funded model of Grin and the protocol-level block reward model such as Zcash, there is another model, the company model. The Ethereum incubator Consensys belongs to this category, and other Blockstream, Lightning Labs, Parity and Block.one.
In terms of companies, these companies receive funds from VCs. Therefore, in addition to maintaining the core protocol infrastructure, companies must build value-added services.
The flaw in this model is whether the future can be sustained, depending on the profit generated.
Due to the nature of capital gains, it is possible to bury potential conflicts of interest for this model. That is, those companies that have capital to join are not completely independent operations, will they compromise with capital in the future development direction and product design decisions?
As the proposal sponsor Kevin Owocki expected, the proposal to fund developers has sparked widespread controversy and discussion.
And SpankChain CEO Ameen Soleimani, from the initial approval to the current opposition, believes that the time is not yet mature.
He believes that "this model will inevitably lead to political power struggle, which is not worth it. First of all, it is difficult to reach a consensus on the initial members of DAO, core developers think they should participate, Aragon thinks that they are qualified to become DAO Members, then, with my ass to determine the prejudice of the head, I choose myself."
“In the long run, the DAO-managed block reward model will not succeed unless 1) the mechanism has been tested through a voluntary donation system and 2) the initial members have experience in decentralized funding allocation.”
It is worth mentioning that Ameen Soleimani himself is the organizer of Moloch DAO, a voluntary donation system designed to accelerate the development of Ethereum infrastructure to address public issues in the open source development of ecosystems, and was named Ether by Vitalik Buterin. The power of the community drive.
Eric Conner said, "After several weeks of watching this protocol-level dispute, I also changed my mind and thought it was a dangerous Pandora's Box. I suggest that you can take part of the transaction fee and create a multi-signature custody. Funds. This is not so complicated and easy to manage."
Aristotle said, "Those things shared by the vast majority of people receive only the least amount of care."
The open source tragedy of the commons is actually a legacy of history.
During the Internet era, people built various commercial applications and services on open source agreements to make money, but they did not contribute to the open source community. They took open source as a gift and took it away, leaving the open source contributors with unlimited pain and development. Only rely on love to generate electricity.
The introduction of the blockchain pass-through economic mechanism allows a blockchain project to be issued to Token for a large amount of financing, and funds to support development.
However, as a complex economic system, the blockchain pass system involves multiple interests, its complex management processes, the game between multiple interest groups, long-term development and coordination of short-term interests all increase the complexity of governance. .
How to positively motivate core developers is not only a problem left for Ethereum, but also a problem for all blockchain systems.
Text / 31QU Xiao Ping