DAOs and Governance

Transcript

away um fantastic so yeah really looking forward to this next session and uh i think bill you're up first so thank you please give a round of applause [Applause] all right uh hi everyone my name is bill laboon i'm with web3 foundation uh which uh i know it's kind of strange but we are the people behind polka dot even though uh our name is a little bit uh different from polka dot uh so i want to discuss today dowse and governance okay so governance um uh in polka dot has a very specific meaning and what we do what we say excuse me what we mean when we say

governance is determining what is going to happen next which also means determining actually the rules not just of our system of our dao that is actually running the uh the entire polka dot chain but also the the rules of the chain itself so it turns out you know our governance on polka dot has a lot of power right we actually can change you know the entire code of the chain and agree to change this code right so we could do something like vote in uh a dictatorship for our governance right essentially you know put some super user um in charge of our chain which as you can imagine uh would

not be great for decentralization um so we have a very uh sophisticated governance system that controls not just you know the dow that is running our system but also the the system itself so our governance system uh is in fact a dow which can control the logic of the chain so if we look at our block chain here uh we as the people that are holding dot the people that are users of the polka dot network can decide what we want the rules of the system to be so this leads to a very interesting so for the people coming in wondering

what this uh strange image is uh this leads to a very interesting set of circumstances where the dow is in fact voting on how the dow works right uh so oh just step aside yeah that's okay i want to come up with some analogy here for for dolls and people walking by but i just can't do it off the top of my head apologies so as we were doing this yo we actually spent quite a bit of time with researchers to determine how we should put the governance you know of our dow and you indirectly right the actual the

chain of the governance of the chain itself and the rules for how the chain uh works uh together so we first came up with some particular goals right so what what do we want well obviously we want to be able to make good decisions so what this means is that we have fair representation and we'll talk about this a little bit uh later the ability to make decisions and good decisions even if not everybody is participating right because this actually is quite a problem uh with uh on chain governance is low participation rates uh security we obviously wanted to avoid loopholes right in in the system and behaviors that would be sub-optimal right because

you know because of these um uh you know if not just coding problems but also just you know game theoretical problems and things like that we want it to be coherent we want to make sure that the compute excuse me the community can stay united we want to avoid forks by making sure that everybody is uh listened to and that they can participate and decide what the future of the chain is we want it to scale we want to make sure that we can allow different proposals and lots of different people to vote on these proposals and finally of course because we're a blockchain because we hopefully all of us agree with this uh philosophy we wanted to be decentralized we did not want any party

to be privileged ahead of time we didn't want to have some members whose votes were worth more more than others we didn't want to have certain people who could just or accounts that could put vetoes uh on things so here were our goals uh for governance uh for again our dow that is in fact controlling uh the chain so we came up actually with a uh a a rather intricate system but ultimate power always always rests in the hands of the dot holders right uh so we actually have a hierarchical system uh so polka dot is a what we call

a heterogeneously sharded system there are lots of different chains that actually are controlled by one what we call relay chain this is similar to the beacon chain and ethereum like one chain that coordinates them and all of these individual uh what we call para chains these shards can have their own forms of governance so it's very decentralized switzerland is a great place for us it's very similar right with the cantons and then you know federal uh power the cantons in our analogy uh the the shards the para chains they have they can have their own governance systems they can have their own unique governance systems that but they are only local to that chain

our para chain like you know the the the federal uh version of our governance uh has uh this this particular configuration but as i said you know we can have different shards that have their own local uh control so anyone no if you have one dot right you can make a proposal you can try to change uh the the direction of the chain and in fact these proposals are automatically executed if they pass governance it's okay if you want to go past here yeah lots of other people already have so yeah no no worries uh so but only only

uh proposals with enough support from others you can essentially second or endorse them so other dot holders can see your proposal on chain uh we have a user interface for this i actually tweet out all the time about what's happening on chain uh and you know if you get enough people behind your uh proposal then they can have you can have it um uh elected uh excuse me voted on by all of the dot holders uh we also have a council uh so and the council can also produce its own um proposals but again these have to go and be endorsed by all of the dot holders you know the

dot holders are the only ones who can actually pass something the council is excuse me elected by the dot holders right so they are you know representatives but they the only sort of you know power they have is another way to introduce uh these proposals okay and these proposals that come from the uh uh from the council are slightly different they're slightly easier to pass than public proposals but we always have the fact that the network is controlled by the majority of the stake so if 50 plus one of dot holders disagree with

something the council does it does not happen right uh same with a public proposal so as i said you know this is a very you know powerful dow essentially right you know this is not trying to do something very specific it's running the governance you know of of the entire polka dot chain and all of its para chains it's shards um so and we've been doing this on polka dots since uh august of 2020 so that's almost two years now we have what we call a canary network kusama which is not a test network but you know an actual operating network that acts uh much like polka dot using the same code and so

and that's been running for a year before that so as you can imagine you know we have learned some things right so not only have we done uh research on this beforehand but we have seen you know how this works what are the pitfalls what are the problems and so i just want to discuss uh a few of those so the first is a bias towards inaction is very important if your dow is going to do something that can be very dangerous right and so it tends to be very difficult to actually get something uh to happen on polka dot

and this this is really a good thing right because if you don't allow this if you uh have a the ability to do something dangerous and do it quickly and have you a a uh you know it's only a small percentage of the network behind it uh it can be really dangerous right so we're very you know like lower c conservative uh with with the network now that said it doesn't mean that nothing happens we have upgraded the code like the our networks code the blockchains code itself uh over 23 times over 23. i should just say 24.

24 times okay uh so so things happen but it is generally i i guess i shouldn't be a marketer you know very convincing uh so 24 times we have upgraded uh this so so things happen but generally it is with the support of a large percentage of those who vote which brings me to our second uh big lesson that we have learned is that it is very important to represent passive participants so you know even in your like uh uh you're like like nation-state voting like you're getting you know let's say 60 70

of eligible voters to vote is is very good uh on polka dot uh we actually consider getting one percent pretty good right because and i understand it right i'm a busy guy you're all busy people uh you don't always want to look and say oh yes yes i'm looking at this hexadecimal code and you know that's that's i don't want to upgrade that right you don't you don't want to spend the time for it so it's very important though that there's they have some voice like these these passive participants that they don't want to spend every day you know they're not engineers they don't want to look at every decision and parameter change so we have a council we have people that are elected that can act on behalf of the of the dot holders and this has

been very important the council can't do much you know again but what they can do is propose things that are easier to pass under low turnout situations so when they when the council issues a proposal uh you you need basically a lower majority in order to pass it than if it's from some person in the public but voting for someone on the council that doesn't take a lot of time you know and once you do it that person is in the in the counsel uh you you uh basically continuously vote for that person you you do one transaction then then you're done and hopefully you know you pick somebody you know good that to represent you

and it turns out you know uh again this is very important right because if passive participants are 99 of your dow of your system and you don't have any representation for them how are you how are how representative are you really and that's how decentralized are you really and information sharing is really crucial because you know i just joked around about looking at you know hexadecimal representations of the byte code that the chain is going to run uh it is important to have education and teach people what what does this mean right a lot of your proposals and not just on polka dot uh but you know other

things i see are very are very hard to understand what does it mean so education trying to teach people what does it mean if you vote yes on this or you vote against it you know what does that mean for you what does that mean for the chain what does that what does that mean for the world if we really want to get deep and philosophical about this um because you know translating uh from something on chain to actual you know use cases and understanding of people that's a big jump right even often for technical people uh but you know for everyone really and so we've really made it a uh a goal it is a goal of mine to teach people understand about polka dot to understand what they're voting on to explain uh these

these votes and finally even though there is a bias towards inaction you really need to ensure that governance can evolve right so if we had seen that there were constantly 95 uh participation in polka dot votes which would be great i would love if we saw that happen uh then we probably would have you know changed some of the mechanisms about how you know about about the council if we had seen that there were a lot of uh like uh spammy proposals right we'd want to change that uh we already are in the process of evolving uh how uh our how our dow makes decisions uh and

trying to reduce the need for the council for for a lot of these things because we have we have seen that this is the way towards decentralization we want to try to reduce these roles um but this is it's a slow process and so even though it should evolve the network should evolve the dow should evolve and our decisions should evolve uh we really you know need to make sure that we do this in a way that you know that is slow steady well tested uh before moving on so uh unfortunately we don't have time for questions i can see that the timer click ticking down uh to zero in front of me but please if you see me around and you have questions about polka dot about

governance about daos please come up and say hi and ask or there are a few ways to get in touch with me here all right thank you very much this is great