Exploring the Potentials of Blockchain for Commons Governance
* Article: When Ostrom Meets Blockchain: Exploring the Potentials of Blockchain for Commons Governance. By David Rozas, Antonio Tenorio-Fornés, Silvia Díaz-Molina, et al. Sage Open, March 26, 2021 [1]
URL = https://journals.sagepub.com/doi/10.1177/21582440211002526
Abstract
"Blockchain technologies have generated enthusiasm, yet their potential to enable new forms of governance remains largely unexplored. Two confronting standpoints dominate the emergent debate around blockchain-based governance: discourses characterized by the presence of techno-determinist and market-driven values, which tend to ignore the complexity of social organization; and critical accounts of such discourses which, while contributing to identifying limitations, consider the role of traditional centralized institutions as inherently necessary to enable democratic forms of governance. In this article, we draw on Ostrom’s principles for self-governance of communities to explore the transformative potential of blockchain beyond such standpoints. We approach blockchain through the identification and conceptualization of six affordances that this technology may provide to communities: tokenization, self-enforcement and formalization of rules, autonomous automatization, decentralization of power over the infrastructure, increasing transparency, and codification of trust. For each affordance, we carry out a detailed analysis situating each in the context of Ostrom’s principles, considering both the potentials of algorithmic governance and the importance of incorporating communities’ social practices into blockchain-based tools to foster forms of self-governance. The relationships found between these affordances and Ostrom’s principles allow us to provide a perspective focused on blockchain-based commons governance."
Characteristics
Antonio Tenorio-Fornes et al. :
"Six affordances6 (Hutchby, 2001), which constitute functional and relational aspects that frame the potentialities of self-organized collectives for agentic action, with regards to blockchain-based tools for commons governance (Rozas et al., 2021b, 8–20):
I. Tokenization: refers to the process of transforming the rights to perform an action on an asset into a transferable data element, a token, on the blockchain.
II. Self-enforcement and formalization of rules: refer to the process of embedding organizational rules in the form of smart contracts. As a result, firstly, there is an affordance for the self-enforcement of communitarian rules, such as those which regulate the monitoring and graduated sanctions in these communities. Secondly, this encoding of rules implies explicitation, since blockchain technologies require these rules to be defined in ways that are unambiguously understood by machines.
III. Autonomous automatization: refers to the process of defining complex sets of smart contracts as DAOs, which may enable multiple parties to interact with each other, even without human interaction. This is partially analogous to software communicating with other software today, but in a decentralized manner, and with higher degrees of software autonomy.
IV. Decentralization of power over the infrastructure: refers to the process of communalizing the ownership and control of the technological tools employed by the community through the decentralization of the infrastructure they rely on, such as the collaboration platforms (and their servers) employed for coordination.
V. Increasing transparency: refers to the process of opening the organizational processes and the associated data by relying on the persistence and immutability properties of blockchain technologies.
VI. Codification of trust: refers to the process of codifying a certain degree of trust into systems which facilitate agreements between agents without requiring a third party, such as the federal agreements which might be established among different groups that form part of such communities.
(https://journals.sagepub.com/doi/10.1177/21582440211002526)
Excerpts
Local Versus Global Commons
David Rozas et al. :
"For our analysis, we draw on Stern’s (2011) identification of limitations of Ostrom’s principles, which has been widely employed in the commons literature (e.g., Nayak and Berkes, 2012; Cox, 2014; Allen and Potts, 2016; Potts, 2019). In his analysis of the limitations of Ostrom’s principles, Stern identifies a set of distinctive characteristics of the commons studied by Ostrom from which her principles were derived (Stern, 2011, 215). Developing from these characteristics, he identifies (Stern, 2011, 216–218) a series of differences between local and global commons that are relevant regarding governance. Stern’s work, however, is focused on rival and global commons, such as global fossil supplies. Thus, in order to analyze the potentialities of blockchain for the governance of CBPP communities managing global digital commons, we need firstly to revisit these characteristics for the narrower scope of global digital commons.
According to Stern (2011, 215), the main characteristics of the commons studied by Ostrom, from which she derived her principles, are:
1. The commons studied by Ostrom are bounded at local to regional scale, in contrast to global commons. Thus, for the cases we are going to analyze, Stern’s differences and limitations are aligned with those from our analysis.
2. The number of participants in Ostrom’s case studies are in the tens to a few thousands, while in the global commons discussed by Stern, he assumes millions or even billions of actors involved. For our analysis, we consider large cases of CBPP communities, such as Wikipedia and large FLOSS projects such as Apache, Firefox and Drupal, that have from few millions to hundreds of thousands of participants (Fuster-Morell et al., 2016). Thus, we consider large CBPP communities, and incorporate Stern’s limitations partially.
3. The third of the differences concerns the degradation of the commons, typical of rival commons. Digital commons, such as FLOSS or digital encyclopedias, are non-rival and, furthermore, sometimes anti-rival (Weber, 2004). Therefore, we do not include the limitations associated with this property in our analysis.
4. In the type of commons analyzed by Ostrom, the participants share common interests with respect to the management of the resource; while in the global commons discussed by Stern, their collective interests tend to diverge significantly. Tensions, regarding different interests, appropriation and co-optation by internal and external actors, are also a common problem in large CBPP communities (e.g., De Filippi and Vieira, 2014; Birkinbine, 2015; Sandoval, 2019). Therefore, we incorporate Stern’s identified limitations regarding this characteristic in our analysis.
5. The participants in the management of commons studied by Ostrom share a common cultural and institutional context; while in the global commons discussed by Stern they come from “all cultures, all countries, all political-economic systems, all political ideologies, and so forth” (Stern, 2011, 217). While large CBPP communities managing global digital commons develop a common cultural context (Fuster-Morell, 2014), the challenges regarding cultural diversity, also identified by Ostrom et al.(1999, 281–282) for global commons, are similarly present in large CBPP communities. Therefore, we incorporate this characteristic and its derived limitations in our analysis.
6. Learning from experience is a possible strategy in the local commons studied by Ostrom, while it is unfeasible for the type of global commons analyzed by Stern. We discard this limitation placed by Stern, since the literature shows how large CBPP communities managing global digital commons develop mechanisms and structures to facilitate the learning and extension of communitarian practices." (https://journals.sagepub.com/doi/10.1177/21582440211002526)
Monitoring, Incentivizing and Sanctioning Community Behavior Through the Blockchain
David Rozas et al. :
" Monitoring:
This principle concerns some participants in the community acting as monitors of behavior in accordance with the rules derived from collective choice arrangements. These participants should be accountable to the rest of the community. Stern (2011) argues that this principle remains essential for global commons, although it becomes more difficult to implement.
Several of the affordances of blockchain for commons governance remain potentially useful in the context of global digital commons. On the one hand, the affordances for self-enforcement (II) of smart contracts and, more widely, that of autonomous automatization (III) – without human mediation – provide further means to track and communally fiscalize new aspects of the organizational processes. Secondly, the blockchain affordance of increasing transparency (V) may enable higher accountability, and might lead to more peer-to-peer forms of monitoring. Peer-to-peer monitoring is usual in CBPP communities, as part of their strong culture of openness. This culture of openness also involves the opening of the data generated in the collaboration processes. This constitutes a useful means for CBPP communities to successfully carry out and scale up their processes of monitoring.
Thus, blockchain might facilitate the monitoring of community rules. On the one hand, smart contracts represent rules of the online communities, which may include automatic mechanisms for specific monitoring. On the other hand, all interactions are recorded in the blockchain and can be observed in real time by any party. This has already enabled users to detect and mitigate the effects of users behaving against the perceived community rules. For instance, in 2017 a hacker stole $32 million worth of cryptocurrencies in Ethereum, exploiting a software vulnerability. As a first response, a group of users called “The White Hat Group” stole all the other accounts affected by the same vulnerability ($208 million), in order to avoid it being stolen by other hackers taking advantage of it. Afterward, they returned that money to their owners, once the vulnerability was fixed (Zetzsche et al., 2018).
The use of blockchain to support transparent and open peer-reviewing (Ford, 2013) is another example of the applications of blockchain for community monitoring. This is seen in the blockchain-based system implemented by Tenorio-Fornés et al. (2019), intended to increase the quality and accountability of peer-reviewing practices in academia. The system relies upon three pillars supported by decentralized technologies (Tenorio-Fornés et al., 2019, 4637–4368). Firstly, an “open access by-design” approach to store publications. Secondly, more transparent decision-making regarding peer-reviewing practices. The system proposes the storage of metadata of the publication process, such as who the reviewers are and the changes between the different revisions, into a decentralized ledger. In this way, such interactions are time-stamped, tamper-proof and subject to communitarian monitoring. Thirdly, the system proposes an open reputation network of reviewers supported by blockchain, which would reward positive behavior and reduce and expose unfair or biased reviews.
Therefore, large online communities can also use blockchain to automate certain rules and enable the monitoring of communitarian behavior transparently. In fact, existing large communities such as Wikipedia already make extensive use of transparent records to monitor user interactions, and automate a large part of the monitoring using bots, programmed with specific responsive automatic actions. Thus, blockchain may be useful to enhance this transparency, improve CBPP community monitoring, and its automation.
Graduated Sanctions
This principle states that participants not only actively monitor but also sanction one another when behavior is found to conflict with community rules. These sanctions against participants who violate the rules should be aligned with the perceived severity of the infraction. As with the case of monitoring, Stern (2011) argues that this principle is also essential for global commons, although it is more difficult to implement because the participants are more loosely connected. For example, the parties in conflict are likely to live in different countries with largely different cultural settings. How to define and execute sanctions in such contexts becomes a significant challenge.
The affordances of self-enforcement (II) and autonomous automatization (III) for blockchain-based governance for large CBPP communities managing digital commons offer, in this respect, several avenues of exploration. Smart contracts can be employed by these communities to automatically self-enforce the rules that regulate the graduated sanctions agreed in the community. Furthermore, this capacity for self-enforcement could be even more intense when considering DAOs. DAOs can take the initiative when certain events happen, and react autonomously upon circumstances or user actions. In other words, they increase the degree of impersonalization with regards to the application of the sanctions agreed by the community. The effects are unknown and could vary: from preventing the usual effect of reacting against the enforcer or “killing the messenger,” to the triggering of frustration and impotence as has been the case with previous reactions against machines (Postman, 1993).
In this respect, we can find existing examples in which blockchain software implements community sanctions. For instance, Kleros is a blockchain project providing blockchain-supported courts. In these courts, a jury formed by community members would mediate community conflict resolutions, delivering blockchain-supported verdicts. Furthermore, projects implementing these blockchain courts such as Aragon Court, have specific rules to sanction misbehaving members of the jury, since the community can start a vote to remove their power in the jury. Thus, large online communities can both encode sanctions in their smart contracts (e.g., losing a privilege if the community agrees so) and use blockchain courts to sanction behaviors against the community rules.
Conflict Resolution Mechanisms
This principle specifies that members of the community should have easy access to spaces in which to resolve conflicts. As in the case of the principle regarding the graduated sanctions, the difficulties identified by Stern (2011) for global commons are derived from the challenges posed by these communities being more loosely connected than those studied by Ostrom.
In this respect, the affordances of increasing transparency (V) and autonomous automatization (III) might be valuable for the design of blockchain-based tools which facilitate the scaling up of conflict resolution mechanisms in these large communities. On the one hand, transparency is commonly employed by large CBPP communities as part of their conflict resolution mechanisms. One can think, for example, of the enormous amount of content which can be found in the discussion pages of Wikipedia; or in the issue lists of FLOSS communities. These large amounts of data are not usually solely related to the digital commons maintained, but also to the organizational processes which surround them. Such transparency facilitates access, participation and visibility of conflict resolution processes.
On the other hand, the employment of the aforementioned DAOs could lead to spaces in which conflicts are made explicit, between members of a DAO, across DAOs, and between DAOs and humans. This encourages communities to establish more explicit mechanisms for conflict resolution, which may be at least partially tackled by automated processes. In fact, Aragon is already working on creating digital jurisdictions for conflict resolution within, and across, DAOs.
As previously introduced in the graduated sanctions section, some blockchain projects are developing blockchain-supported courts and other arbitration mechanisms (Metzger, 2019). In the case of Aragon Court, there is a hierarchy of courts for conflict resolution. Primary courts are “low cost” (since they imply a small cost in cryptocurrency), although the system enables appeals to higher and more expensive courts if a party is not satisfied with the verdict. However, despite these developments, these courts are far from replacing standard courts of laws, nor do they tackle major conflicts. In fact, we often see the resolution of conflicts in blockchain projects themselves being discussed and resolved in more traditional online platforms, such as social networks, forums and blogs. At times, these conflicts have also been escalated to traditional state courts. For instance, in the ecosystem of Aragon, a conflict over funding allocation and contractual obligations between the Aragon Association and the company Autark ended up in the Swiss court12.
The blockchain-supported courts and similar conflict resolution mechanisms could lower the cost to solve conflicts within global communities, and provide transparency to the conflict resolution processes. Moreover, the sole discussion and definition of a legitimate conflict resolution mechanism in an online community can reduce the effects of the so called “Tyranny of Structurelessness” (Freeman, 2013), in which power dynamics are strengthened when no formal structure is provided. Thus, blockchain can offer additional conflict resolution mechanisms to the tools already in use by global communities managing digital commons." (https://www.frontiersin.org/articles/10.3389/fbloc.2021.577680/full)