Blockchain Governance with Vlad Zamfir (Ethereum Foundation) at Ethereum Meetup 2018



hey everyone how's it going just gonna plug my laptop in here make sure it's going and all right sweet hi everyone thanks for the introduction Jing and since we only have like 25 minutes let's get started so I'm going to talk to you today about challenges and opportunities in blockchain governance here's our basic outline I'm gonna give a brief introduction to governance and blockchain governance and then I'm going to talk about quite a depth some of the challenges that we face in blockchain governance and then some of the opportunities before giving a short conclusion so governance is about decisions how we make decisions like what processes we follow what are the rules like structures that we use to actually make decisions how do we coordinate around these decisions or around these structures and then how do we kind of decide which of these structures to use and which of the coordination norms to use so this kind of like decision-making process these coordination around decision processes and this kind of meta coordination of like of like deciding which process to use so a little more a little more in detail the politics kind of represents this like meta coordination process it's very unstructured we have like a lot of conversations about the way things should be that maybe eventually form the basis for legitimizing or D legitimizing a norm that's actually an expectation about how people will behave when coordinating around a particular governance process which will might have like formal rules about who makes a decision where when and that like could constrain people maybe in much more formal ways then and much more rigor and much more constrained ways than they are in politics which is kind of a much more unconstrained thing so this kind of overview of governance basically looks at like these decisions to decision-making processes coordination or decision-making processes and then kind of met this meta coordination it's process of legitimizing and D legitimizing like the means by which we coordinated and so this is kind of like an overview of governor of things that we look at when we talk about governance watching governance is governance applied to the blockchain right block chains are distributed systems so they fundamentally have some different parts here they've got nodes nodes run software in the distributed system they are usually gonna be run by node operators who download software from software repositories and then there are also trademarks because because block chains you know they kind of appear to peer network where like either I can synchronize with you or not we have to use names to talk about which blockchain we're using and so that means that like trademarks are kind of inherently involved in blockchain in practice because it's unlikely that anytime soon block chains will stop having names so blocks in governance basically is the governance of these things it's governance of the nodes the software repositories and the trademarks and all of these decisions kind of need to be coordinated because like the it's a consensus protocol so it's only really useful and as far as the nodes can actually synchronize with each other and so if I upgrade my software and you upgrade your software in any consistent way then that's not going to be any use any use and so we have to kind of coordinate around this around in our decisions and so it's like you know a kind of a coordination problem as well it's not just like a completely distributed and non coordination governance problem so basically anyone who's making decisions about these things are definitely involved in watching governance so node operators developers trademark owners absolutely participants in watching governance but there's also people who are a little upstream from these from these participants who are also definitely involved in blockchain governance you know if you help coordinate node operators if you influence the agenda of developers if you indirectly affect how trademarks are used by pressuring in exchange to list Bitcoin caches Bitcoin if you participate in chain politics around Forks and the support of Forks or weather or you know whether or not you and if you've you know like try to participate in these discussions where people decide whether or not bitcoin cashes Bitcoin then like you're also participating in blockchain governance and whenever we talk about like the legitimacy of different blotching governance processes or communities you know you're participating in this politics that really is kind of the heart of watching governance so anyone who's legitimizing D legitimizing decisions and norms and processes of governing any of the things that are the resources of a blockchain are participating in blockchain governance so you know you you might think that you're not a participant in watching governance but most likely you are because most likely you'll pine on these things so now we get to the kind of fun part of the conversation so so blockchain governance is actually quite challenging but there's two types of decisions technical decisions and social decisions and both can actually be very political as we've seen in the Bitcoin world especially and in theory in world to be very fair you know the the the most famous technical dispute I guess is over the Bitcoin block size is very very political in aetherium we had a you know very political process around the DAO heart Fork there's also been lots of politics around the parody a hack and frozen funds and and then those are examples of I think social what I'm calling social governance decisions as opposed to technical decisions so you know we don't really know yet like oh what you know we don't really have an idea clear out consensus in the space about what's an ideal way to govern the blockchain either from a tech point of view or a social point of view but here's a couple of norms that have are very very prevalent in the world today minimize disruption to existing code this is like a matter of practical but I think it's been enshrined to a point where it's some it's almost a religion for some people but but but but the idea is like oh when anything that you propose should be you know the the least disruptive way to achieve that goal sometimes it means making much more complicated spec or doing something a little bit weird but if it ends up being less disruptive to the codebase then that's kind of considered to be preferable and so if you can oh if you can do anything in a slightly less disruptive way to existing code like that's considered to be better and the other one that seems to be pretty common norm is that we want these things to be maximally politically and socially scalable but we don't agree on what that means or how to get that actually so but and the other thing is like the blockchain is international it's multi-jurisdictional and that means that establishing the legitimacy of these these social social decisions is quite a lot more challenging than the tech decisions because these social considerations vary a lot between between cultures and between jurisdictions you know you have different obligations and expectations of people in different and different cultures and so that may and that makes it quite a lot more difficult but on tech decisions people can find more common ground because it's like relatively more objective so I mentioned the social scalability thing it was not actually super clear that socially motivated governance is that not then not making socially motivated decisions is more is more socially scalable so this is something that people tend to believe but they're you know it's possible that we're gonna have pathological smart contracts and if watching governance doesn't interfere with them the people will be upset because they're gonna suffer damages from these from the execution of these smart contracts and so because of the potential damages that smart contracts could cause it's not super clear that not doing anything on the social governance side is actually the most scalable thing so you know we can't really it's hard to agree on an international level what to do with some of these social questions but we do another thing than that like it's obviously also gonna be harmful because there's inevitably going to be criminal malicious smart contracts and then what do we do in that case well it's quite different quite difficult because people in different parts of the world people with different political philosophies will feel very different very differently and what happens if you make if there's an illegitimate decision this is actually one of the ways that like blockchain governance it's kind of interesting is that there's a there's a really big risk and opportunity for forking in the context of a legitimacy so if there's a decision or that's made by say like the developers to change some software in a way that people regard as illegitimate they might decide not to not to install it and if that software upgrade is a hard fork then that could lead to two ball chains with two different watching communities and this is kind of caught this is called forking and box chain space and it is kind of immediately like debates of forking happen whenever anyone like proposes or considers any kind of contentious governance thing seriously because it is the net it's and it's the kind of natural response to legitimate governance because you can really just copy the whole blockchain and you know it's you know it's not like governing and nation-state where you have like uncopyable resources but for the so the barrier to forking here is actually much lower than the than the barrier forking and like you know more traditional settings for governance so but forking is kind of costly there there are coordination costs it's it's to organize a successful for to prevent people from forking you have to do a lot of politics you have to talk to people and convince them of you are like worldview and to be on your side on this kind of political issue and then there's technical costs and risks because someone has to implement the software and it might have bugs and so and if you ship buggy software that might have like technical costs and those with a lot with losses of network effects so there's an extent to which having less not have your peers use the same blockchain as you is costly and so we want to avoid that right and so actually the the threat of forks has any big impact on watching governance because it means minority participants have more leverage because they can impose cost and everyone by not complying with the with the decision and it was basically by not by not going with the decision that everyone else thinks is legitimate and and the costs are basically these coordination costs you know confusion about the trademark what software to run like you have to coordinate with your peers to figure out which of the block chains they're going to be which is which of the versions of watching they're running so just a vocal minority who believes that a decision is illegitimate has a lot of power just by through this for for seeing of this issue of the cost of forking which are which which you know are super real you know just ask Bitcoin core how much time they've spent dealing with Bitcoin cash way more than they want to so so basically this this kind of effect bias these participate participants in blockchain governance to only do things that they think will be widely considered as legitimate this is kind of ends up being our environment where people are very risk-averse and this actually makes it harder to make socially motivated decisions like any kind of you know returning of stolen funds interfering with malicious smart contracts and kind of you know any kind of attempt to remedy damages done by smart contracts are much harder because that kind of thing is exactly the kind of thing that is liable to have a minority of people who believe it's legitimate and therefore will basically scare participants in watching governance because they don't want to run into this nightmare of this like legitimacy crisis and coordination around which blockchain is the theorem you know which blockchain is Bitcoin and what are we all gonna do because it you know you do have to it just takes time and effort and it's there's uncertainty it's that it's definitely not not not cheap or easy and so socially motivated decisions I end up getting II mean even more difficult because of this because of this forkful nature of the blockchain space and the fact that it has Network effects and this also means that it's quite challenging to govern the blockchain with the law so imagine if a US Court were to order a governance decision for boxing governance almost inevitably someone would som like significant sizable community outside of the US would view that decision as illegitimate and would not install the patch and the the the the network would be split into at least the first time this happens you know if it happens a whole lot of times like probably not every time it'll split right only when it's like super contentious you know it'll be kind of like because of the network effects and there's gonna be like a power-law distribution where like some chain is super successful and there's lots of relatively smaller splits that are maintained by communities who really felt strongly about that that order but definitely like the first time it's gonna be it's it's it's it's definitely challenging right for the for example US court to be legitimate on a global stage for governing the blockchain especially with the level of legitimacy that's required for there not to be a let work split which is much higher than just say like a majority so you know and then and then we have this trademark questions you know it was one of them called aetherium USA and the other are you if they're in global you know which ones bigger it's kind of a gamble at the start you don't really know depends on like where where everyone goes and what who the participants are and what and what jurisdictions you know would it be illegal to use aetherium global in the USA you know and how would that be enforced without internet censorship you know these are like really challenging questions about like how the law trying to govern the blockchain would work and what and when and and also why it maybe might not work in like as effectively as for governing things inside your jurisdiction so establishing and maintaining legitimacy of governance it's difficult but having a nun governed blockchain may not actually be socially acceptable or optimal in any way but the forking and the forking International nature of the governance makes routing the legitimacy of watch-chain governance in the legal tradition a challenge because you know I mean whose law and no one I mean everyone wants it to be their law but everyone agrees also that it's international and all and particularly useful because it's international global so so the so that's a lot of the challenges but a lot of this story actually is interesting and there's a lot of opportunities also so the blockchain is a new kind of global international institution that isn't based in the legal tradition but is based in this tradition of like distributed systems and game theory and the kind of like cyberpunk tradition it's and and and traditional international institutions based in legal tradition actually have a lot of limitations basically by the the state is ultimately sovereign and and there's volatility submitting to the terms of these institutions and if they ever decide that to change the law and to renege on those terms then the institutions lose lose their teeth because ultimately the states are sovereign not the international institutions that they create and they're basically voluntarily engaged in and so and so like the international institution space is cut it's kind of like a bunch of contracts that are you know only enforced while there's incentive alignment because the Sooze there's incentive misalignment and the laws change the the international institutions lose a lot of their teeth but in the blockchain that we have like actually is somewhat of a different story because all of the things on the blockchain will continue to exist even if you fork away and you know still be incentivizing them by them if there's at least some minority that's significant and has and decides to maintain the other the the non fork version of the system if you you know which is kind of really interesting right so normally like if you if you off to out just by yourself like that would you know significantly impact the way that an international institution like in legal tradition can enforce terms on you but just opting out unilaterally does not significantly and for a change the incentives that you face from a smart contract assuming that like no one else Forks with you and then and and that's kind of kind of super interesting because it means that there's there's there's more broad consensus as required for governance decisions for blockchains then then then it was required for international institutions and legal iteration and also very notably these things are kind of platforms at least like in a theorems case and so we can we can we can put things on there and then just inherit the properties of watching governance in the sense that they're on the blockchain and therefore are governed by blockchain governance and it's much easier to experiment with institutional design than it is in the legal tradition because you don't need to be a lawyer and you can just be a programmer but on the other hand the reach is much smaller than the law right the law the law reaches far and wide whereas like the blockchain can only really reach in time inside the state of the consensus protocol and so but but there are hybrid systems that are possible where like there's no reason why you can't use the law and use the blockchain and to create a new kind of institution or an interesting organization so you know I guess you know the blockchain is a new kind of international institution and and and because of this minority influence property and the fact that like you can't see you you already has a lot of say in governing watch-chain international institutions built on the blockchain are gonna have different kinds of dynamics than international institutions built on legal system and I think this represents a real opportunity in blockchain governance in the sense of you know and blockchain based governance of all sorts of things so you know I think there's we have we have some some real challenges because watching is difficult to govern so we don't really know how to establish you maintain the legitimacy of decisions especially socially motivated decisions in the legal tradition it seems like this we're gonna have all it's relatively hard time establishing a basis for the further legitimacy of watching governance perhaps it's conceivable that there could be like an international legal watching governance regime where there's like a legal international institution that whole but where a whole bunch of nation-states together decide on like which are the mandated forks but even that today sounds incredibly controversial and very difficult to imagine how that would be legitimate and and so you know maybe what we're kind of left with this world that we have kind of today which is that like we really have uncertainty about how the blockchain is gonna be governed we don't really know like who can legitimately interfere with the execution of smart contracts if anyone and what this means in terms of like you know how can we cope with autonomous smart contracts that like people won't interfere with even though they might be causing damages so there's like there's a lot of really interesting challenges and offer and I think really interesting opportunities and watching governance so you know I think we need to think about this early and often and we need to be mindful that all of the decisions that we make today and all of the precedents and norms that we make today are probably will exist tomorrow or you know a lot of times they do unless they haven't there has to be a lot of effort and tooji legitimizing them and then of having many long term consequences far beyond what people kind of anticipate and so it's really important to think on like this big picture level about you know blockchain governance like what is the cost of not governing the blockchain and how does it exist in the context of legal systems and of like you know this like international governance regime that we have today so with that I guess the thanks a lot for listening appreciate it [Applause]

Maurice Vega

7 Responses

  1. There's just soo little information on blockchain governance so everytime i hear Vlad speak, its like a breath of fresh air. Even though this one was really short one and hardly went into any important details.

  2. I don't think thats is boring. I learned a lot of new things. TechCrunch, do you have reviews or intervies with founders of https://emercoin.com/en? IMHO, this blockhain does not concede Ethereum. Their DNS-system one of the most effective.

  3. 0:21 Sweet! 😛 LOL
    why are you still using Ubuntu and not Manjaro? it has recently become more popular to download than ubuntu… been using it for years now and as an "arch based" OS it is far superior to ubuntu/debian based OS

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