Written by: Liu Jiaolian
During a weekend meeting for the community chain project, I shared my thoughts on the governance issues of public chains.
First, let's talk about why the so-called public chain governance issue arises.
BTC is also a public chain, but there is no so-called governance issue. Why? Because BTC has no governance, at least not the on-chain voting governance mechanism that people usually think of.
It is generally believed that in the entire BTC ecosystem, there are three forces that balance and check each other. These three forces are: maintainers who have the authority to modify client code; miners who hold the power to generate blocks in the blockchain; and holders who possess BTC ownership and can vote with their feet.
If code maintainers arbitrarily merge and release rule codes that have not achieved widespread consensus, they will face resistance from miners who refuse to adopt that version of the software, and in severe cases, they may encounter sell-offs and project abandonment from holders. Besides resistance and fleeing, miners and holders can also choose to support software versions released by other maintainers, leading to a situation where a particular maintainer team and its products are abandoned by the market.
If miners violate consensus and attempt to seize control of the code, they will face unanimous opposition and condemnation from the developer community and holders. The developer community and holders can abandon the chain hijacked by a minority of miners and continue to run the original chain that aligns with community consensus. However, the dark forest principle tells us that this only applies when the total computing power controlled by the power-seizing miners is less than that of the miners supporting the original chain; otherwise, the power-seizing miners can use overwhelming computing power to launch attacks against the original chain and completely destroy it.
This illustrates the dialectical relationship between the gun barrel and the pen. The gun barrel represents material power, which plays a decisive role. But who commands the gun barrel? The pen. The pen is not just a passive implementation of code but actively shapes the consensus of the community. Therefore, all struggles ultimately are ideological struggles. How can the pen command the gun barrel? The key lies in the pen representing the will of the people, the broadest consensus, and the ideals of the largest community.
Who are the people in the community? Are they the holders? Not entirely. Holders who support BTC are the people of the community; holders who oppose BTC are traitors and targets of struggle; non-holders who support BTC are friends and part of the united front; non-holders who oppose BTC are enemies and competitors.
Among the people, there are different proposals regarding the technical route. As long as everyone supports BTC, it is an internal contradiction among the people that can be negotiated and reconciled. However, if someone is opposed to BTC or aims to overthrow BTC, they become the object of resolute struggle and dictatorship by the people. For those under dictatorship, we must firmly suppress them, deprive them of freedom of speech, and expel them from the community. In short, the constitution only protects the rights of the people, and traitors have no right to enjoy those rights that only the people are entitled to.
It is therefore clear that any ideology will resolutely reject those who do not agree with or oppose it. The most important task of the pen is to figure out how to unite the largest majority, gain their support, and allow the community to gather the most people, thus obtaining the greatest power.
Internet platforms combine the pen and the gun, which leads users to choose between enduring or angrily fleeing. Satoshi Nakamoto's ingenious design separates network operation and code development, allowing them to constrain and balance each other. More importantly, it prevents either from forming a monopoly: open-source code gives anyone the opportunity to establish new codebases, diverting broader consensus; the entry and exit of the computing power network are completely anonymous and do not require permission, combined with the randomness of the PoW block generation mechanism, making it difficult for network nodes to monopolize the operation and blockchain generation.
However, when we discuss non-PoW public chains, it becomes very difficult to completely replicate BTC's non-governance model.
In short, PoW is the only solution to the Byzantine problem. Once we remove PoW, we can only introduce certain governance mechanisms to compensate for the issues caused by the absence of PoW.
For example, for the PoA (Proof-of-Authority) used by the Jouleverse chain, it is necessary to conduct authenticity and independence reviews of the accounting nodes to avoid classic Sybil attack issues.
Qualification review will inevitably raise the entry threshold, and it cannot be as completely permissionless as PoW. It can only be said that to ensure a high degree of decentralization, the threshold for this qualification review must be low enough, but it should not fall below the minimum level of security.
As for whether such a chain can still be called a public chain, that is purely a matter of conceptual definition. There is no desire to engage in this purely conceptual debate, as it is of little significance.
Back to the essence. There is also the issue of incentives. PoW not only guarantees a permissionless extremely low entry threshold (the only threshold is having money to buy equipment plus a bit of technology), but also serves the task of distributing BTC as incentives to miners. PoA lacks this automatic incentive distribution capability, so governance work is also needed here to periodically evaluate, compile, and distribute incentives for contributions.
From a certain perspective, company management involves evaluation, statistics, and incentives. The question of how to implement this in a blockchain environment has become a new topic.
Copying the corporate system may lead to centralization, and centralization can produce corruption and dysfunction, resulting in single point failure issues. Complete decentralization, relying on community self-awareness and spontaneity, leads to particularly low efficiency, to the point of losing timeliness, much worse than the real-time incentives of PoW.
Many successful blockchain projects have adopted a combination of companies (financing and management entities) and DAOs (holder communities), such as Uniswap and Aave. Even Ethereum, whose main driving organization is the Ethereum Foundation, is essentially a centralized company. However, this may not be suitable for public chain projects that require a higher degree of decentralization.
Perhaps we need to combine top-level decentralized governance with organizational management borrowed from corporate systems. For example, establishing a board of directors at the top level, but the board is not granted decision-making power based on investment and share ratios like in corporate systems; instead, it is elected by community votes. Below the board, starting from the CEO and executives appointed by the board, the organizational management methods of the corporate system are still used, setting positions and responsibilities, assessing and incentivizing, as this structure is easiest for most workers trained in modern corporate systems to understand, avoiding confusion about who they are, what they should do, and what results they can expect from their work.
Perhaps such on-chain companies can be referred to as DAOs or something else. However, practice always precedes theory. The governance forms suitable for blockchain are still being explored, and the road ahead is long and challenging.
