Written by: Liu Jiao Chain
During a weekend meeting on community chain projects, I shared my thoughts on public chain governance issues.
First, let's talk about why the so-called public chain governance problem arises.
BTC is also a public chain, but there is no so-called governance problem. Why? Because BTC does not have governance, at least not the on-chain voting governance mechanisms that people typically think of.
It is generally believed that there are three forces in the entire BTC ecosystem that contest and balance each other, thus mutually restraining and constraining one another. 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 own BTC and can vote with their feet.
If a code maintainer unilaterally merges and releases rules code that has not reached widespread consensus, they will face resistance from miners who refuse to adopt that version of the software. In severe cases, they may encounter selling pressure from holders, leading to a final rejection of the project. In addition to resistance and departure, miners and holders can choose to support the software versions released by other maintainers, thereby causing a particular maintainer team and its products to be abandoned by the market.
If miners violate the 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 operate the original chain that aligns with the community consensus. However, the dark forest rule tells us that this only applies when the total computing power of the usurping miners is less than that of the miners supporting the original chain; otherwise, the usurping miners can use overwhelming computing power to attack the original chain and completely destroy it.
This demonstrates to us the dialectical relationship between the gun and the pen. The gun represents material force and has a decisive role. However, who commands the gun? The pen. The pen is not just a passive implementation of code but actively shapes the community's consensus. Therefore, all struggles ultimately boil down to ideological struggles. How can the pen command the gun? The key lies in the pen representing the heart of the people, representing the broadest consensus, and embodying the ideals of the largest community.
Who are the community people? Are they the holders? Not entirely. Holders who support BTC are the community people; 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, which can be negotiated and reconciled. However, if someone aims to oppose BTC or even overthrow BTC, they become the target of the people’s resolute struggle and dictatorship. For those under dictatorship, oppression must be decisive, speech freedom must be revoked, and they must be expelled from the community. In simple terms, the constitution only protects the rights of the people, while traitors have no right to enjoy the rights that the people deserve.
Therefore, it is evident that any ideology will firmly reject those who disagree or oppose it. The most important thing for the pen is to understand how to unite the greatest number of people, gain their support, and allow the community to gain the most people, thus gaining the greatest power.
Internet platforms combine the pen and the gun, forcing users to choose between enduring or fleeing in anger. Satoshi Nakamoto's ingenious design separates network operation from 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 a new codebase, diverting broader consensus; the addition and exit of the computing power network are completely anonymous and permissionless, combined with the randomness of the PoW block generation mechanism, making it difficult for network nodes to monopolize blockchain generation.
However, when we discuss non-PoW public chains, it becomes difficult to completely replicate BTC's non-governance model.
In simple terms, 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 arising from the absence of PoW.
For example, for the Jouleverse chain using PoA (Proof-of-Authority), it is necessary to conduct authenticity and independence reviews of the accounting nodes to avoid the classic Sybil attack issue.
Qualification review will inevitably raise the barriers to entry and cannot be as thoroughly permissionless as PoW. It can only be said that to ensure the highest possible degree of decentralization, the threshold for this qualification review must be low enough but cannot fall below the minimum safety threshold.
As for whether such a chain can still be called a public chain, this is purely a matter of conceptual definition. There is no intention to engage in this purely conceptual debate, as it is of little significance.
Back to the essence. There is another issue, which is incentives. PoW not only guarantees a very low permissionless entry barrier (the only requirement is having money to buy equipment plus a bit of technical know-how), but it also takes on the task of distributing BTC as an incentive to miners. PoA lacks this automatic incentive distribution capability, so governance work is needed here to regularly assess, tally, and distribute incentives based on contributions.
Company management, in a sense, involves assessment, statistics, and incentives. The question becomes how to conduct this in a blockchain environment, which is a new subject.
Copying corporate structures may lead to centralization, and whenever there is centralization, corruption and dysfunction may arise, resulting in single points of failure. A complete decentralization relying on community self-awareness and spontaneity can lead to extremely low efficiency, thereby completely losing timeliness, which is far inferior to the real-time incentives of PoW.
Many successful blockchain projects have adopted a combination of a company (financing and management entity) with a DAO (holder community), such as Uniswap, Aave, etc. Even Ethereum, with its main driving organization, the Ethereum Foundation, is essentially a centralized company. However, for public chain projects that require a higher degree of decentralization, this may not be suitable.
Perhaps it is necessary to combine top-level decentralized governance with organizational management drawn from company structures. For example, establish a board of directors at the top level, but the board is not entitled to voice based on capital contribution and share ratios like in a corporate system; rather, it is elected by community votes. Below the board, from the CEO and senior executives appointed by the board, the organizational management methods of the corporate system can still be used, defining positions and responsibilities, assessing and incentivizing performance. After all, such a structure is easiest for the majority of workers trained in modern corporate systems to understand, preventing them from falling into confusion about who they are, what they should do, and what results they can expect.
Perhaps such chain-based companies could be called DAOs or something else. However, practice always precedes theory. The governance forms suitable for blockchain are still being explored and have a long way to go.
