Special thanks to Glen Weyl, Phil Daian, and Jinglan Wang for reviewing this article.
In recent years, more and more people have begun to pay attention to how to regulate the behavior of participants in different scenarios through economic incentives and mechanism design. In the blockchain domain, the primary purpose of the mechanism design is to provide security for the blockchain and encourage PoW miners or PoS verifiers to participate honestly. However, in recent times, mechanism design has also been applied to scenarios such as forecasting markets and token curated registries. At the same time, the recent RadicalxChange movement has also led to an experimental upsurge in the assumptions of Harberger taxes, Quadratic voting and quadratic financing. In addition, in the field of social media, how to use token-based economic incentives to encourage high-quality article creation has become a hot spot. These systems need to address some of the challenges in the development of theory and practice. In my opinion, our experience in dealing with these challenges is not enough.
For example, a media platform called “Currency” in China recently launched a token-based mechanism to encourage people to post. The basic design of this mechanism is (click here to read the Chinese version of the white paper), platform users can bet their own KEY coins to "like" the article; only "like votes" k times a day, and The “weight” of the “like vote” is proportional to the amount of tokens the user bets. The more the tokens received in an article, the higher the quality, and the authors can get rewards proportional to the amount of coins they like.
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I just briefly introduced this mechanism and omitted some of the more complicated designs, but these designs are not very important for the basic operation of the entire mechanism. The value of KEY stems from its many uses on the platform. Especially worth mentioning is that all advertising revenue is paid by KEY, some of them will be allocated, and the other part will be destroyed (Wow! This design is really good?, did not make the token into the exchange medium! ).
This design is not a special one. How to motivate online content creation is something that many people care about. There have been many similar designs and some very different designs. At present, the currency has accumulated a large user base.
A few months ago, the Reddit section of the Ethereum deal /r/ethtrader introduced a similar design, releasing a token called "doughnut" to reward users whose comments were liked. The section will issue a certain amount of doughnuts per week, and the user's donuts are proportional to the amount of praise they receive. Donuts can be used to rent the top ad slots in the section or to vote in the community. However, the reward mechanism of donuts is different from the KEY system. The singer does not need to pledge the token, so the reward that the acclaimed person can get is not affected by the amount of tokens held by the singer. The bonus weights for each Reddit account are the same.
The above several experimental mechanisms have made it valuable to open up new ways to reward high-quality content creation, breaking the embarrassing situation that was previously limited to donations/small rewards.
Nowadays, the whole society is facing a very important problem, that is, the lack of compensation mechanism for user-created Internet content (UGC) (see "liberal radicalism" and "data as labor"). Many communities are trying to use the power of mechanism design to solve this problem. Unfortunately, these systems are extremely vulnerable.
Self-voting, chaebol rule and bribery
Here's how to attack the above mechanism through economic means. Suppose now that there is a local tyrant who holds N tokens, he can perform k-like polls, and the reward for each vote is N * q (where q may be a small value, such as q = 0.000001). This user only needs to open a vest account and like this account to get the reward of N * k * q. That is to say, during each round of voting, each user can get the “interest rate” of k * q; if there are no other restrictions, the system can no longer provide any normal functions, leaving only a crash.
The incentive mechanism of the currency seems to anticipate this problem, so a superlinear logic is used. The more KEYs an article gets, the more rewards the author gets, and the increase is more than proportional. This incentive mechanism encourages users to create popular, popular articles rather than gaining revenue from self-satisfaction.
The use of ultra-linear logic to prevent self-satisfaction from harming the entire system is a common model for token voting governance systems. Similarly, most DPOS can have a similar effect through some mechanisms: the protocol limits the maximum number of agents, and users who are not elected as agent nodes are not rewarded.
However, such mechanisms often have two major drawbacks:
- Equal to subsidizing the chaebol , because wealthy individuals and cartel organizations can still vote by virtue of their strong financial resources;
- Users can vote for other users by bribery
Although bribery attacks don't sound too good (how many people have experienced bribery in real life?), they may be more common in a mature ecosystem than we think. In many cases, bribery in the blockchain field has been beautified by the bribers: this is not a bribe, called "equity pool dividends." Bribery can also be done in a hidden way. Imagine a zero-cost cryptocurrency exchange, painstakingly creating an exceptionally perfect user interface, but never profiting from it. Instead, it uses the tokens in the user's existing exchange to participate in various token voting systems. Over time, people will become accustomed to this small group of collusion; for example, a scandal about EOS DPOS that was previously published:
Finally, there may be a “threat-type bribery” situation in which the participants are forced to vote according to the briber's request by extortion or defamatory means.
Take the /r/ethtrader mechanism design as an example, because the fear of someone buying a donut coin to manipulate the decision-making vote, the community decides that only the locked (ie, untradeable) donuts are eligible to vote. But there is also a lower cost of attack than buying coins (this is another very hidden way of bribery): renting coins. If an attacker owns an Ethereum, it can be mortgaged to a platform such as Compound to lend another token. In this way, the attacker has the full right to borrow the token, including voting. After the vote, the attacker can send the token back to the loan contract and retrieve the previously mortgaged Ethereum – in this way, without the risk of currency price fluctuations, the attacker can use the borrowed token to influence the vote. As a result, it does not matter even if the token voting mechanism (for example, the currency) has a lockout period set.
In either case, it is generally difficult to solve the problem of bribery and individual local tyrants.
Some systems attempt to use identity systems to undermine the impact of chaebols on token voting. Take the /r/ethtrader donut system as an example. Although the governance decision voting in this system is implemented in the form of token voting, the donut coin reward mechanism is built on the Reddit account system: a reddit account can be replaced by N donuts. The reward of the currency.
The ideal goal of the identity system is that it is easy for an individual to get an identity, and it is difficult to get multiple identities. The /r/ethtrader donut currency identity system relies on a Reddit account; the identity system of the Gitcoin CLR Matching Tool relies on a Github account. However, identity fraud is too easy, at least so far there has not been a more complete identity system design.
Do you think it is too much trouble to get a shelf? Maybe the following is more suitable for you:
Hong Kong, it is much easier to manipulate thousands of fake identities like a sergeant to attack these incentives than to bribe users one by one. Are you thinking about it, as long as you upgrade your security requirements to government-level authentication? Well, if you want to try it, you can check it out first, but don't forget that professional criminal organizations have been one step ahead. Even if you put all the fake gangs in a pot, you can't prevent some unscrupulous governments. We are really stupid enough to make a profit-making space for identity fraud when designing the system, they will fake a million passports out of thin air. Not to mention the reverse attack, for example, the identity issuing agency denies the validity of its identity documents in order to deprive some marginal communities of their power…
In the face of multiple identities and liquidity markets, wave after wave of incentives has collapsed. Some people may ask, are there any deep points of commonality? I think there is, and this "common point" is that it is easier to establish an ideal incentive mechanism in a model with anti-collusion than a model that does not have anti-collusion. Most people may have felt this intuitively. The specific case of this principle is reflected in: Generally speaking, industry standards and laws advocate promoting market competition and resisting price cartels, buying and selling votes and bribery. However, this problem can be dig deeper.
If it is a game theory model that focuses on individual choices (ie, assuming that each participant makes decisions independently, and that participants are unlikely to hold a group for the common good), there is already a mathematical proof that the game that conforms to this model must have at least one stable Nash equilibrium strategy combination, and the mechanism designer has a higher degree of freedom in the design of the game environment to promote specific results.
However, if it is a game theory model that allows collusion (ie, a cooperative game theory model ), many games that conform to this model do not have a stable result, and the alliance can still profit from changing the strategy.
The majority game is defined as a game in which the number of participants reaches N, and a coalition of more than half of the participants can obtain a fixed income and internalize the proceeds. The scary thing is that this model is just like many scenes in our lives, such as corporate governance, politics, etc., which are games with inherent instability. That is, suppose there is a fixed amount of resource pools and a mechanism for allocating these resources, and this mechanism cannot prevent 51% of participants from conspiring to control the resource pool, no matter what mechanism this mechanism currently uses. Design, participants can always find ways to cross-benefit profit. However, the alliance relationship is often not strong, the old alliance collapses, the new alliance is born… the old and new are replaced, and the cycle begins again and again.
It is because of this instability that the majority game based on cooperative game theory is seriously underestimated. It is regarded as a simplified general mathematical model to explain why there is no ultimate political system proposed in the “end of history conclusion” and a system that can prove perfection; I personally think that cooperative game theory does not have Arrow. The Arrow's theorem is so famous, but it is much more useful than it.
There are two ways to solve the problem of collusion. The first is to strictly limit ourselves to the types of games that are “no identity” and “anti-conspiracy” so that there is no need to worry about bribery or identity fraud. The second is to face the problem of identity fraud and collusion, find a proper solution, and design an anti-collusion game model with more attributes.
Translation & Proofreading: Min Min & A Jian
(This article is from the EthFans of Ethereum fans, and it is strictly forbidden to reprint without the permission of the author.