Governance failure: Maybe arguing about POW, POS who is more effective, is essentially wrong

1. Dispersion of rights

Since we are talking about governance, we must first understand what governance is. How did it come about?

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The word governance is not in the company law at the beginning. In the original individual-owned enterprises and partnerships, there is no word of governance. Anyway, the stakeholders are just a few people. When the boss takes a table, things are decided. The company’s size is the boss’s decision, no governance. The problem of not governing.

When the size of the company gradually becomes larger, such as when there are limited liability companies, joint stock companies, and listed companies, the stakeholder is more and more, and the company is faced with the separation of ownership and decision-making power. How to check and balance, how to distribute the benefits is important, so there is a problem of governance.

This is the origin of the governance problem – the decentralization of power creates governance problems!

When power is highly concentrated, there are only management issues and no governance issues. This problem can also be understood as follows: the higher the degree of centralization, the more focused on management; the higher the degree of decentralization, the more focused on governance.

Compared with listed companies, the economics of the general public is more open, the power is more dispersed, and there are more stakeholders, so the importance of governance issues will become increasingly prominent.

2. Make decisions under the power of dispersion

Although there is no clear definition of the concept of governance, generally when we talk about governance, governance may contain the following specific meanings, generally three aspects: the distribution of power, the mutual restraint of power, and the distribution of interests.

But whether it is the distribution of power, the mutual restraint between powers, or the distribution of actual interests, it is inseparable from a specific decision, which is reflected in the form of decision-making. How is the decision made? Who proposed, who voted? Who has the right to propose a resolution? How to pass? Wait, these are the specific content of governance.

Therefore, my personal definition of governance is:

The so-called governance is how to make decisions in the case of decentralization.

On the one hand, governance is not for the purpose of eating, but for decision-making; on the other hand, governance is to make decisions in the case of decentralization.

The decentralization of power will bring many practical difficulties. The most common situation in reality, such as the US election, one person, one vote, the power is very scattered, but the price is that the election needs to last a long time, the voting process is very long.

The blockchain project is the same. Taking EOS voting as an example, EOS holders can vote for super nodes, but the operation process is very complicated and the final voting participation rate is extremely low.

3, the initial rules are very important

In the general blockchain project, an initial rule is formulated during financing. This initial rule contains many things, such as the amount of tokens, the issuance of tokens, the structure of coins held by various stakeholders, future destruction, and generation. Currency usage scenarios, company voting mechanisms, decision-making mechanisms, etc.

The initial rules are important, and the completeness of the initial rules directly affects the difficulty of subsequent governance. The more complete the initial rules are, the fewer places need to be adjusted later, and the less difficult the governance; the simpler the initial rules, the more places to be adjusted later, and the difficulty index of governance increases.

The initial rules are important, but none of the initial rules are perfect. The society is constantly changing, consumer preferences are constantly changing, the business environment is changing rapidly, and competitors are constantly developing, all of which require our rules to keep pace with the times.

Nakamoto's bitcoin rules have been designed to be as perfect as many people think, and the most valuable thing is that his design is as simple as possible. The white paper is only 8 pages, and the structure logic is very clear. Even such a perfect and so simple rule, in the subsequent development and high-speed changes in the business competition environment, has also shown that it is not suitable, but also created a series of problems such as expansion, hard fork, lightning network, etc., must also continue Adjust optimization.

4, the right to modify the rules

Most people do not have the opportunity to participate in the development of the initial rules. When you come into contact with the project, the initial rules are fixed. If you participate in ICO financing, or hold a token for a project, it is equivalent to defaulting to its initial rules.

Since we said above that the initial rules are not perfect, the subsequent changes will involve changes to the rules.

In the case of centralization, this is a very simple question. The modification will be revised. If the boss makes a decision, the boss may be happy if he is happy, and it will be changed three or five times a day.

However, in the case of decentralization, the modification of the rules is a very complicated matter in the case of decentralization. The opinions of all parties can never be unified. If you really use the power of voting, or the Token voting method, the efficiency is extremely low.

Moreover, the blockchain industry still has some special features. The blockchain industry is popular with a phrase called "code is law", which means that regardless of the distribution of power, the mutual restriction of power, and the distribution of interests, the rules are all in code. The form exists, so the governance of the blockchain industry is also embodied in the modification of the original code/rules.

It can be said that in the blockchain project, whoever obtains the right to modify the code is equivalent to obtaining the right to modify the rules, who can get the power and benefits behind it.

5. Fairness and efficiency

When we discuss the question of which PW and POS consensus mechanism is better, we actually default to the existence of the best consensus mechanism in the world, and our goal is to find it. But this premise is wrong, the consensus mechanism is not the best, only the most suitable.

Because what we want is not a consensus mechanism at all, what we want is to achieve a certain function. If this function does not require a consensus mechanism, then we don't need a consensus mechanism at all; if a consensus mechanism can help us achieve this function better, then this is more suitable for this project. Consensus mechanism.

On the whole, all the consensus mechanisms are choosing between fairness and efficiency. I saw that Xiao Feng’s speech at the Hangzhou Blockchain Summit was very good:

The consensus algorithm is a concept of intervals. We are emphasizing decentralization, and in a sense, decentralization is also emphasizing fairness. Decentralization emphasizes fairness. Centralization emphasizes efficiency to some extent. Therefore, such a thing is not a blockchain. In the past 100 or 200 years, the entire human society has been swinging between them and is irreconcilable.

So I said that we have to understand that when the blockchain really comes to different business application scenarios, different business application scenarios have different requirements for fairness and efficiency. If this scene requires extreme pursuit of fairness, then we can help him achieve it in an extreme decentralized way; if he is extremely eager to pursue efficiency, then we must use a centralized approach to help him achieve it, which is only for commercial purposes. .

6. In the end, the game between people and people

At the bottom of governance, although it is composed of consensus mechanisms and rules, in the end, all governance will always become a game between people.

Rules are objects, people are subjects; rules are dead, and people are alive.

Whether you are using POW or POS, the difference is not big. Because the consensus mechanism only determines what people play around the game. If you use POW, then people play games around computing power; if you use POS, then people play games around voting.

The ancient Chinese saying is: "The shop is bullying, the guest is bullying the store." The power of "shop" and "guest" is not absolute. It depends mainly on who has great influence and who can win in the final game.

In a decentralized governance system, no one has supreme power, and each person holds a part of the right, but there is no way to determine the direction of each individual power! Everyone plays a role in promoting things within their own sphere of influence. This is a process of constant internal and external evolution and a common game.

The process of this game is the process of decentralized system to make decisions. The result of the game is the final direction of the decentralized system!

I have cited such an example, it seems quite image:

It’s like a few people playing the landlord, one person got the king, OK, the king is very powerful; the other person got the little king, OK, Xiao Wang is also powerful; the third person got three 2, OK, three 2 a big card;

Everyone's cards are big, but the size of the king 3 2 is not enough to ensure that you win this game, and whoever wins and loses depends on how to play. You need to decide how to play according to the overall structure of the card, and change it according to your opponent's situation.

If you are the winner of the big king, four 2 plus straights, you must be deceived in this poker, and others will not play with you.

That is to say, although the size of the card itself is very important, the process of this game is the real key.

In the end, it all depends on the game!

7, the core is unable to rely on

Many people think that the biggest problem encountered in the governance of blockchain projects is the choice of consensus mechanism and some specific implementation problems. I don’t think so. I think the biggest problem encountered in blockchain project governance is not from Internal, but from the outside.

At that time, BCH’s BSV’s power war was originally on the same front. There was no disagreement in the general direction. There were some differences in the specific speed of advancement. However, this was a question that could be negotiated, but in the end the two sides split. It also caused price volatility in the entire cryptocurrency market.

The problem is already obvious. Even if there is no big disagreement between the two sides, only small opinions are not unified, and still cannot be solved through governance. The final solution still looks very primitive and desirable; POS is the same, and the rules of many POS projects are changed. Change, even the white paper is changed and changed, and the ordinary holders have no way at all.

The real problem of governance is not the choice of consensus mechanism and the distribution of power. Instead, there is no standardized process that can be implemented without legal basis.

Just like a listed company, you have to accept a set of standardized process audits before going public. There are both historical and legal aspects of the company, patents, patents, financials, and personnel. After the company goes public, you have to Those who regularly disclose financial reports, accept third-party audits, and have to accept continuous brokerage supervision, not to mention the securities laws and company laws behind them.

Governance is useful in this standardized process and strict legal constraints; without standardized processes and strict legal constraints, the term governance is just a matter of name.

At present, the blockchain world is still in the “extra-legal place”. There is no standardized governance process, no restrictions such as mandatory information disclosure, and no legal law rules can rely on it. It is entirely based on the self-discipline of the project party. There is no point in talking about governance. Even if there is so-called governance, it will become an infinite attack and wrangling.

8, governance for the scene service

When we talk about governance, it is easy to think about the governance of the consensus mechanism such as POW, POS, DPOS, etc., and sometimes there will be a contempt chain of consensus mechanisms: POW mocks POS, POS mocks DPOS, POW, POS, DPOS Taunting PBFT. . .

Our thinking is not limited to this. Governance should be a highly flexible thing. In the case of complying with the corresponding rules and laws, it should be as flexible and flexible as possible.

Governance is to serve the project. The project is to meet the needs of real society. The real needs of society are complex and changeable, so the governance mechanism can be ever-changing and not constrained.

It's not that others use the power to vote, you must use the power to vote; not that other people play the lock you must play the lock; not that other people engage in the node you must engage in nodes. You can have your own methods. Your governance mechanism is not to be in line with others, but to serve your business and application scenarios.

9, summary

a. The decentralization of power creates problems of governance;

b. The so-called governance is how to make decisions in the case of decentralized power;

c. The initial rules are important, but none of the initial rules can adapt to all scenarios;

d. The focus of governance is that the parties compete for the right to modify the rules;

e. All governance options are chosen between fairness and efficiency;

f. Governance is ultimately a game between people;

g. The core problem facing governance at present is that it cannot be relied upon, not the choice of consensus mechanism;

h. Governance does not have to be rigid, and governance serves the scenario.

Source: Blockchain Learning Society

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