Voting in Blockchain Communities

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Jaya Klara Brekke, Kate Beecroft and Francesca Pick:

"Network technologies have been considered by social movements and digital entrepreneurs alike to enable large-scale direct democratic participation on issues, rather than merely voting for representatives in elections every few years. But such networks and new technologies that enable direct democratic participation and everyone potentially able to participate in ongoing decision making led to concerns about ‘voter fatigue’ (meaning non participation). Liquid democracy was an idea to address this by delegating votes on certain matters to people that the voter would trust, with the power to take back their vote at any time. A member of a community would assign a proxy vote to any other member, thereby assigning a personal delegate. Liquid democracy is now often referenced in blockchain settings but precedes blockchain as a voting mechanism, coming from earlier network cultures seeking to use digital network technology to “upgrade democracy” (Ramos 2015). Blockchain added the idea of incorporating “economic incentives” as an additional design strategy to address perceived problems in voting processes including voter apathy.

In blockchain-based online groups, voting (sometimes called “coin holder voting”; Buterin (2019)) is often the proxy for decision-making under the mantle of “on-chain governance” (Lucsok 2018) and thus constitutes a large part of the focus of groups experimenting with and building governance frameworks, tools, and protocols. This implies the use of voting in order to decide on what should happen in a group and what a group should do. Beyond technical decisions, online communities vote about actions that community members want to pursue, including who can join the group, who gets what resource to build or work on what, how fees and returns are distributed, rules for dealing with bad actors, how to evolve the governance protocol itself, and forks.

Access to voting is predicated on first holding “governance tokens” that act as a right to vote, and then, second, “locking” or “staking” these tokens. Quadratic voting is designed so that people can attach a cost to their vote, with the intention that people will express the degree of their preferences rather than just the direction (Posner and Weyl 2018). The DAOstack project developed a voting system called holographic consensus solution that aims to “allow for decisions in a DAO to be made locally—that is, with limited attention and voting power, as long as these decisions are ensured to be in line with the global opinion of the DAO” (Field 2018). Voters “upstake,” betting that the proposal will be supported by voters, or “downstake” to bet that will fail. The mechanism behind holographic consensus requires a relative majority approval and the use of staked tokens to predict if a proposal will pass, which proposes a “signal” to the rest of the group (Santander, 2019).

Because there is no way to limit the addresses that hold and stake tokens, there have been long-standing claims of “plutocracy,” and the danger of systems designs leading to governing by the wealthy. In order to solve this, reputation systems have been developed; actors earn nontransferable “reputation” based on their activities, which enables them to have more influence in voting. So instead of those with the most economic influence becoming the most powerful actors, power also accrues to individuals that “make good decisions.” Zamfir (2017) argued that plutocracy only happens in “societies,” and blockchains are not societies; thus, there has been an overreaction to these fears. Yet, the growth of reputation systems to token-based governance as a way to try and limit plutocracy indicates that many projects seek to yet again solve a potential issue “on-chain” (Red, 2018).

Formalized, on-chain voting is thus conceived as the mechanism through which individuals can express preferences and disagreements. Yet where such preferences come from, how they were formed, and other ways of communicating intentions and preferences are deliberately sidelined. Differences are understood as ahistorical individual preferences that can be expressed through a mechanism and then computed and dealt with through the protocol. As a result, the day-to-day deliberation, forming of group preferences, network cultures, and off-chain conflicts are either ignored or formalized and codified by moving more of these into online on-chain contexts for resolution through incentives and other mechanisms. In some cases, this has the effect that an increasing amount of such interactions are sought to be formalized into the “legitimate” form of decision-making, namely, on-chain voting, leading curiously to governance maximization rather than minimization."