The Next Generation of Decentralized Governance by tracheopteryx | Devcon SEA

[Music] [Music] all right so yeah I'm really happy to be here take a moment to just enjoy that for a second hey everyone so I'm going to be speaking about decentralized governance today um I'm try opck I'm a dinosaur I um I'm the chief governance officer at igen lir or at the igen foundation that's where I'm working previously I worked at I was a contributor to urine Finance where gentleman who's leaving right now who spoke before Gabe shaper and I both designed a governance system called constrained delegation which informs a lot of the work that you just saw in borgs and also what we're building at igen layer um I also was a co-founder of coordinate which is a system for decentralized compensation so I want to start like why does it even matter you know why do we need decentralized governance why is it important um I think we talk a lot about governance minimization which is really important if you can minimize it do but what in there's no way to minimize things at the frontier you know you can't reduce the most new confusing misunderstood things into immutable code there are periods where human beings have to come together in subjective reality and reason things out and make decisions together we need some form of collective decision- making and we always will um and the forms that we have now and have for centuries aren't so great they lead to Wars and various other things so beyond just the ability to launch a token and not get sued decentralized governance has the potential to do much much more uh it has the potential to give us ways to not stop killing each other for instance which we haven't figured out um as a species it's a tall order uh and there's a lot to do to get there obviously but you know here we have three predators that are already doing it so this is we're going to take our cues from them um I want to talk a little bit about why what Dows are doing now before we talk about the future decentralized governance so today uh Dows are really good things like increased transparency in organizations beautiful more permissionless access to information and control uh capture resistance all these onchain uh Technologies allow for for much greater security and to reduce capture by small groups give more access to people and they allow for decentralized decision- making which has been an incredible Advance over the past um you know five years eight years but it's not all happy stories right there's a sad dog as well um for instance Dows are pretty bad at Power concentration if you look at a lot of decent what seemed like decentralized Dows you find that under the hood they're maybe not so decentralized they're also bad at skill task matching which is something we'll talk about a little bit more um there's tons of principal agent problems all throughout Dows and low accountability and while they're doing decentralized decision- making I'd argue that it's pretty ineffective lowquality decision- making in most cases so what's the next Generation though so far we've done well at decentralizing but what's next and it's it's pretty simple it's making them decentralized and effective which we don't really have any examples of today but we're getting there and so that's what we're working on at igen layer so igen layer we're doing ethereum reaking helping create uh new ecosystem of avss and um taking things offchain putting them on chain on ethereum to expand what's possible um this is a big ambitious Vision it's a big open ecosystem that we're building and we need effective and decentralized governance we need the people build bu on IG layer to have control and ownership over what happens on the commons that we're creating together uh and you know it has to be you know for now it's it's a tricky question decentralized or effective right you can kind of choose one we don't have the Technologies to do both yet so in the beginning it's kind of okay to be a little bit more centralized and if lefas is out there we're not a DA yet right we're trying but we're not yet we're starting more centralized and we're going to decentralize over time and um that's because we're focusing on quality decision making we're not going to give that up um and we believe that we can do both but later over time it really does have to be centralized because you can only trust you know in the beginning the participants in the ecosystem need to know that IG is making good decisions right but over time after the you know honeymoon period is worn off you need to trust that they're not going to screw you and uh that needs to be decentralized so we have this process we call incubation which is our version of progressive decentral ation and in Progressive decentralization usually you know you have a foundation which has the power and it controls everything and then and then it gives like a chunk of power to a dow and then another chunk of power to the Dow um it's good we're adding more gradation to this so uh our version of this incubation we take decentralized structures and we operate them in the open as if they were decentralized uh but they're controlled by the foundation they're centralized to start and we're not pretending they're not right but we're doing this because that's how we learn that's how we can learn to make these structures actually operate in a decentralized way and then over time we decentralize them bit by bit in a public you know open discussion with the community it's because we have two contradictory things that we have to do like we have billions of dollars in tvl we can't play with that you know we have to make sure that that's secure so we need both a minimal secure and stable governance system to minimize risk but we also need to do something that hasn't been done before we need to make it effective too so we have to be radical Innovative and experimental in order to invent this future so in order to do that we've created we call Version Control governance it's like a two trck system of governance we've got the core system which is the secure layer it's handling just the minimal stuff that's needed to make sure the protocol is working and that stays you know if that needs to be more centralized okay it's as decentralized as it can be and then we have the vision track and the vision track is where we're experimental and we're creating the systems that will be able to merge back in over time into core once they've proven themselves to be effective so let me tell you about what we're making so it's OV is what we're calling it um it's this is going to be a very brief overview we haven't launched this stuff yet we will soon and I want to so if there's a lot of questions some of this might not make so much sense I'm G to make do the best I can we'll be publishing a lot more of this over time so in designing I go we started kind of at the beginning um what organizations need to do and there's kind of three things there's decisions there's decision makers and then there's decision- making and that's how organizations both centralized and decentralized function decisions are the same stuff that we've always had what should we do who's in charge how much does it cost it's variations of this so we don't need to worry too much about that we're not fundamentally changing what a decision is but decision- making decision makers there's a lot of room for change um decision- making has done a lot of development over the past uh you know five years on chain voting off chain voting multi- rough consensus all the different things that we use to do decentralized governance um continue to be developed continue to need more advancement as well decision makers need a bit more work so decision makers are things like unique human beings which supposedly can make good decisions in democracies um we also have tokens which supposedly can make good decisions in in Dows or delegates where you take 100% of your voting power and you delegate it to another human to make decisions and 100% of the things in a dow regardless of what they're good at or not um these are not such great decision makers in my view and so we're trying to improve this the first step is we're not doing token voting um token voting itself I mean this is a bit of a nuanced one because we are doing token voting but we're not doing normal token voting token voting in its normal form you know is what I said you have a governance token and whoever owns this token now can say things about about any matter they're a security expert or they're a capital allocation expert but this isn't true and one of the one of the myths I think that we that we' we need to break and Dows I think there's a there's this idea it's kind of beautiful that that we're just going to be able to put together a big group of strangers and the collective intelligence of that group is just going to solve our problems we're just going to give our responsibility to this group and they're just going to make things work and that's a myth that's not true um decision- making business operations organizations these are things that require responsibility accountability relationships over time you can't just give this to an anonymous group of people now anonymous groups of people uh can make certain classes of decisions quite well but they can't do these in a vacuum you know metallic written about this convex concave decision- making this true that you want to you want to estimate an average of certain types of decisions a large group might do better than a small group but again these decisions don't happen in vacuums so what happens is if you give this power of of of an organization to just the wisdom of the crowd you might get decisions that work in in a small box but they don't work in reality like giving hundreds of millions of dollars for Grants when you don't have the ability to really oversee it um and this is not this is not just one group many groups make Pro decisions like this but if you're a small group of people um with relationships and accountability and things at stake you probably won't make those decisions um another thing about token voting is that you know it's going back tokens using a cryptoeconomic token to you know provably make a decision about something not is a great system that's great the problem is who are the deciders that are using that and what is the structure around it often there's this idea about governance fatigue like this is the problem governance fatigue if you think governance fatigue is the problem you're seeing the thing completely wrong it's not that means you're giving people the wrong jobs to do right what you need to do is we need to give people the right jobs to do and then they won't be fatigued so in OV the starting premise we're not sacrificing on decision- making quality all decisions are made by small groups of high context High trust domain experts that's the foundation that's where we start why because there we do have a super Intelligence on this planet and it's not an llm and it's unsure if that will even get there the greatest super intelligence that we have on the planet is a group of seven people that trust each other and worked together for a long time or fewer that is the smartest thing that we know of and we've known this for a while but you know a lot of research shows is after about seven about intelligence drops about 10% per person and once you get up to large group sizes you get pretty dumb uh so we're trying to hit that sweet spot of a small group and this is you know like a family like like a small team this is what does the best decision making so we start there uh why and then we could talk a lot about why but if you look at the the relationships so work in life in Creative work it's about relationships if you have a group you have two people one relationship three people people three relationships then four six relationships 10 relationships 15 each relationship needs to be maintained each relationship is a vector they can have misunderstanding conflict tension confusion so as you grow it becomes unwieldly but you know we can manage uh in small sizes this is slime mold uh it's not a on secator um so if we wanted to keep scaling and just think we want a homogeneous group of decision makers the best we can think of is maybe slime mold so slime mold is all these different cells they're all kind of the same cell but there's lots of them and they make decisions as a group and they do pretty miraculous things but you know it's kind of limited what we need is actually something more like a fly brain now this is a heterogeneous group of centralized and decentralized actors woven together in really complicated ways to make complicated decisions this is what we need for Dows and so igov starts with this idea of small teams making decisions and it starts with the idea of councils and councils there'll be a variety of councils will talk about them is how all decisions get made now how do the councils get uh populated elections are a great way to put popular people in charge of things but not a great way to necessarily put the right people in charge of things we've created a system called endorsements which is a way to create reputation um and decentralized reputation is a research area that we're super invested in and will be very important in the future a lot of people are working on so we'll talk more about endorsement um and also decisions decisions is how we actually weave all this stuff all together and we're working with Incredible Partners like tally and hats and EAS and others to build all this stuff so this by the way is speculative so left Terrace don't yell at me if this isn't what happens um we plan to make a variety of culs and using the incubation process Powers will incubate within foundation and then they will be spawned into councils groups of powers and then over time as they mature spawn into more councils uh pending the amount of overhead needed to make all these things work together um but this creates a better distribution of powers more checks and balances more specialization so each council is a group of high trust High context expert domain experts in the field that they're making decisions on each councils has a limited scope of power in the constrained delegation model which they can act in and many of these will be borgs just like what Gabe was talking about previously now endorsements how we find people with these councils it's similar to delegation uh this is a sneak peek at the uh endorsements platform that we're making but instead of Delegation again you delegate 100% of your voting power to one person with endorsements when you sign up to be a contributor which is our version of a delegate uh you say what are you good at so Roger is good at auditing governance and Leadership and so when you trust Roger by St by using your stake Dion and allocating it to Roger to make decisions it's according to those specific skills that he's now empowered and this does a number of things in the system it also increases your voice so you'll be able to signal on all proposals we'll talk about this in a second rather than just you know eventually filling Council seats so I want to talk about how decisions get made this is um what a lot of dows the model that a lot of dows follow so you have token hold ERS that can either become delegates themselves or they can delegate their token stake to delegates and then those delegates vote on proposals and those delegates then elect councils elect members to councils who can also occasionally Vote or veto on proposals so we changed this model quite a bit um in our model token stakers who have something at stake you know uh they're not just holding the tokens to sell them uh can be curators or contributors and I'm going to pause here for a second because this curator one is kind of new so when you're a curator you um are making endorsements um so perhaps you're a token Staker but you don't know who is the best at opsac in the system so you can just assign your tokens to a curator and then the curator is the one that's paying attention to all the contributors in the system and and then similar actually what Dennis was talking about previously in the talk when when you're you know um you want to make money from staking tokens in a governance system you want to make sure that if you're if the incentives are coming from people taking action in governance such as our are plan as well then you want to make sure that your endorsements are going to people that are going to be creating value because you'll be incentivized for it in the future so curators also solve a big problem in Dows which is liveness uh most Dows uh there's an airdrop people come in they claim their stuff they delegate to they send their tokens to a delegate and then that never moves and then that that token power is just not moving and that's not a very good map of the world for an organism for an organism to be intelligent it needs to create an updated map of its environment and so liveness is key to that these curators people are curators are are going to be incentivized for creep keeping a you know highquality map of who is contributing as well as evaluating those contributors over time which outside the scope of this talk for now um so you can assign to a curator or you can endorse a contributor for various skills now the contributors that get the highest uh endorsements with most trust and and relevant skills can then be eligible for councils and eventually will automatically fill councils uh and then councils vote on proposals but uh token stakers need to have ultimate Authority so they can veto proposals in many cases that they don't agree with and uh in the worst case they can Fork the inter subjective igen token if the governance gets captured so and then the last piece here is about experts signaling so this is how decisions get made there's a discussion phase then there's the council voting phase and then after that there's the veto period um that whole time there's a phase of expert signaling so contributors that have gained reputation in the system for various skills can weigh in on every proposal and this is a sense-making advancement to support Council decisions it's non-binding but it's important and the people that are in the community need to be in discussion right so if there's a controversial proposal and the and the community can discuss it experts can signal on it and the council can vote and the council might have some idea if they're going to get vetoed or not before that stage happens through this right but you want that small group of people to be able to take anti-majoritarian action because they might not know things that the rest don't and they are there for a reason so there's a balance um and that's most of it so just want to talk a little bit about the future um we have a lot of research to do and a lot of work to do to make all this happen right because this this stuff hasn't been figured out yet that's why it's not a it's not tested we have to we have to work on it before it's really decentralized so there's a few areas I really want to focus on one is we need to create a system of decentralized reputation um and there's a lot of work there um there's a lot of things I want to say about it but I don't have time so I'm going to skip it for now we need for decentralized reputation to work we need decentralized identity um and we also need evaluation systems accountability incentivization systems for these types of decentralized systems because if we don't have this stuff councils can be captured but councils should totally be able to function in the open under the control of a decentralized governance system and be capture resistant if we have a lot of these things uh we also need to do productization Dows are a mess you know we need to apply product development standards to the way our Dow tooling and systems work so that all information and processes have ux that works people can understand and figure out how to use and we also need to have credible commitments because this along with decentralized reputation is what will allow for these things to really function at a high velocity and change um you know this kind of messy ex beautiful experimentation period into really the future of work where High Velocity small teams of groups come together and ad hoc ways to create products and incentives and get retroactively funded build things deploy them and then break up and go onto other jobs like the um the the nature of the firm is changing dramatically you know from these large centralized ver Integrated Systems to these small groups of autonomous Sovereign contributors able to gain reputation to gain incentive to make to make use of their gifts in the world because all these problems that we have the metac crisis everything it's all solvable with all the gifts in all of you and all of us in the world if we can figure out a governance system a system to support us in offering all of these gifts to the world and um in service of solving these challenges and taking our civilization to the next level so that's everything I'm tricky opx thank [Applause] you thank you so much thank you so much man that was awesome and people you're finally using the application to ask the question so we have a few questions here already uh do you want me to I I'll use the votes I'll use the votes to start choosing the questions so first question is the endorsement system system is Ally similar to expertise endorsements on LinkedIn which were removed due to their ineffectiveness how is this different than linking with tokens it's a great question and it's not oddly similar I mean we looked at systems like LinkedIn uh without a good system of decentralization of of sorry of reputation without a way to incentivize good endorsements and punish bad rep endorsements it's not much any different than than LinkedIn so right now now it's quite similar in the future it will be quite different awesome next question consuls with limited scope can have domain experts that are in multiple consols leading to a scope crep any plans for consal service limits or requirements yeah definitely there'll be term limits and there'll be eligibility requirements there'll be legal Contracting in some cases uh there'll be kyc in some cases and um I don't know I think probably people will just be B to be on one council at a time but there might be some cases where it's appropriate to be on two we'll figure that as we go um but being on two could create conflicts of interest that we want to avoid we'll have to see awesome uh tough questions the current design seems similar to op's promise of we will decentralize what accountability will aen have to actually make progress we know we don't we don't have any I mean we companies can do whatever they want right like op doesn't have to decentralize I think um you have to look at what's in our interest you know so if igen layer doesn't decentralize I think over time that it cause a lot of problems for us and so we can say whatever we want but look and see what we do awesome so how to avoid that delegates just elect councils who will create things good for them then later they will approve yeah so uh there's three key things so I just kept it to decentralize and effective but actually there's a third one that's really important too which is alignment um so you want to it's the principal agent problem right how do you know that your investment broker isn't just making trades that stack his bank account or her bank account this is I like to turn this around we actually think of it as the principal agent solution because the the alternative is that you are both principal and agent and nobody's got time for that right so it's a huge solution to be able to split things up from you know ownership to control but how do you keep that alignment um it's super tricky and and most of our research path is is designed around solving exactly this question decentralized reputation is a key piece of that so if um which is also outside the scope of this discussion but um let's say that there's we we believe there's ways to incentivize a reputation system uh using things like trust assignments the endorsements that we're doing skill assignments to make it much more align than it is today but just wait we'll we'll share more on this soon good good any way to Transit treel like decision structure to decentralized the structure to Transit a tree likee decision structure to decentralized structure um I I mean I'm a little confused by the question somebody want to speak to that a tree like structure could be decentralized um are you saying like a hierarchical structure uh all we can skip it yeah okay uh we can go with the last question and it's the control of token holders is limited removing value from the token plus ACR value to conso positions instead AO is significant significantly less power than the power to do why token at all then well the token isn't for governance the token is for interest subjective foring it's not a governance token um why use the token in governance well because token holders are the owners of the protocol um and if they always have a governance action that they can take which is to sell their tokens uh but before you sell your tokens why not you know you you should have voice as well we believe one of the things I could have mentioned this talk is that everybody in the ecosystem has value token holders the avss The Operators the lrts everyone building on it all the partners all have value and one of the the big magic of putting putting together a governance system is figuring out how to help that value flourish in the right ways and what's the right job everybody what's finding the right job for the right group and token holders have a really important job they are the ones whose finances are at stake based on the of the actions of the organization and so you want to give them a lever you want to give them a voice the problem is giving them the voice of making all decisions for a dow is is just not a very good connection of skills and opportunity right um or skills and challenge so what is the appropriate voice for them and we feel that the appropriate voice is it's two things right one is deciding on who makes the decisions right which is similar to um a lot of forms of of of nation state governance uh so they can endorse contributors that then have the power to make decisions and they're in charge of those endorsements they're in charge of curating the space um but then there also have this fear response like in a body like we're creating a body the um there's another thing I could have talked too there's an executive Council that is a kind of uh Authority the top authoritarian layer then there's expert councils most of the councils making these domain specific decisions then there's the majority layer of token holders and and reputation holders that are that are um curating the space vetoing the space and at the bottom there's this self- enforcing layer of of token forking so yeah token holders have a really important role but it's just not the role that we're used to okay thank you so much and people please put those hands together for trick up the risk