Digital Democracy in DAOs - Theodor Beutel

Transcript

[Applause] [Music] thank you thank you everybody glad to see you all here um so um yeah my name is the ble I've been working in the do space for a while uh as a governance lead for safe and and I guess I've become quite disillusioned over the years um so I mean who would have not thought that blockchain solves all of Humanity's coordination problems in instantly right so that's an issue um but I'm here today um in my capacity as a researcher with the university surk I'm also part of U's project and working together with P um on this project he mentioned um

exploring digital democracy ows and rewriting this paper uh which I'm going to introduce today to you um we have some plinary findings so they're not really final yet um but yeah um maybe just to dive into um I guess we can all agree that democracy is getting Rock pulled lately when trumpcoin launches and people like um you know italic or Puja uh sort of make it quite clear that this is a pretty convenient vehicle for uh bribery and and Corruption um and yeah so also am mean uh Solani co-founder of mow just last week as well treated uh questioning

whether everyone should have a right to vote um saying I don't believe everyone should have a vote and um he is an influential reputable person in the Dow space um also working on spank chain um so um to go into the paper um um just for for context um I'm not sure how much you all are aware of D but I think it makes sense to see them sort of as this wide vast solution space of of plurality where you have lots of um mechanisms being explored um they also very modular

um the infrastructure um has lots of bits and pieces often there um can be combined in in various ways and of course it's also permissionless Innovation where you don't have to ask for approval it's quite of quite a flat hierarchy um everyone can just build like user Innovation is really strong here so in some sense we have 10 years of rapid prototyping of democracy um I would like to see it like that and so the question emerges um what's new here um or maybe does does do Dows and does democracy and Dows just repeat the same mistakes democracy and and Humanity has done over over centuries and and and longer so um

let's dive in and the definition we are um adopting is um by um s Hassan and Prim de fipi um that a dow is a blockchainbased system that enables people to coordinate govern themselves mediated by a set of self-executing rules deployed on a public blockchain and whose governance is decentralized e the independent from central control so um quite a classic definition um focusing on the onchain aspects um of course you might think but but um I think we all have some we we may have some sense of what is the da really the the term has been used quite extensively recently for a couple of reasons and

I'll come back to that later but interestingly also at defon we had a few reports being presented by mov introducing DS in Asia in Singapore Korea um and Taiwan especially uh which I can recommend reading and they they really framed as a cultural movement um enabling philosophy um sort of as a placeholder for Hope for Change and they are quite explicit that many of them are not at all onchain they are offchain so um that aside we just acknowledge that this is a very recent Trend but we are conducting a literature review so we are focused on the theory um being available um uh in

the academic uh body of literature um and and looking at um these research questions how digital democracy is defined and Dows focusing on mechanisms and challenges um and the methodology um really briefly is is following the the Prisma approach sort of a process to uh make uh systematic literature views more transparent and um yeah repeatable and um yeah we after removing after applying inclusion and exclusion criteria to 599 uh individual papers we came up with um

51 um papers that qualify and so I'll just give you an overview on the mechanisms first um and then we can continue to the challenges and and uh maybe go a bit broader I'll also also want to leave time for questions at the end so please um i' encourage you to think of some of you if you may um so first obviously maybe onchain governance uh would probably qualify as a mechanism um and of course this is interesting in a couple of ways um we have accountability um um we can expect that we have transparency uh we have a temper

prooof a record of of votes that are cast on the Chain um and um if you look at the second column we can probably say that these that applies to all Dows of course depends on the definition um going back to the earlier slide but this is a widely um widely used um mechanism of course and in terms of novelty to the ocracy beyond the crypto space um we can probably say this is quite High just due to the novelty of um blockchain technology and its um decentralized nature um but that the novelty aspect may not be that that high for other aspects for

example subsidiarity uh for example subd we've seen lots of dows um having um like um ports they are called sometimes subd Dows um some other terms apply as well where within the Dow you see um yeah smaller groups who organize independently and I think subsidiarity is a really interesting principle where um which we also see applied um I think in Switzerland a lot in Germany in in the European Union to some extent where decisions that can competently be made on a smaller scale are made on that smaller scale so sort of a opposing idea to the top down rule uh but but but

focusing on on taking decisions at the smallest level possible and those are not a perfect example of that but some go into that direction and we have a few occurrences um also um voting of course uh we have Democratic voting mechanism specifically um civil resistance is the term that is mostly used um in the literature and in practice to to discuss whether they are actually Democratic because of course we have this problem on the blockchain we have wallets but we don't know about people we have uh a single person can easily of course hold lots of lots of wallets uh we have sophisticated privacy Tech which I

believe is a very good thing but that also makes it really hard to uh have certainty on how many wallets uh are individual people or belong to the same person um so that's a really hard problem and we see uh many approaches uh most not notably maybe World coin who are also present here with their quite controversial um biometric um Iris scan also seen lots of other life proof of humanity a bright ID um also social mechanisms um um connected to un Universal basic income trying that but I think it's fair to say that we have only few occurrences of that um because of

course as you know we have lots of non-democratic voting mechanisms and just going back to the Democratic voting mechanism the novelty may actually be quite low just because uh nation states have a pretty sophisticated way of ensuring that through kyc uh blockchain just makes that a lot harder um of course also due to its values um non-democratic voting mechanisms which are not the focus of this paper but I guess should be mentioned because we have many of them include um token rated voting they include meritocracy they include something like conviction voting quadratic voting they all not necessarily one person one vote but um of course also worth exploring um

because people like um Glenn Vale argue that something like CTIC voting is in fact uh maybe a superior mechanism for democracies um but this is beyond the scope really of of this paper um so these are highly relevant of course but moving on we also have delegation um which is not a novel mechanism at all maybe liquid democracy uh has not been EX exped what much with much in in democracies beyond the crypto space I think we have the pirate party in Germany trying that out um but in in the crypto space that is quite a popular approach used occasionally whereas delegation is used

frequently however introduces many problems um which we come to later um adaptive or dynamic C rooms are also an interesting vehicle I guess the the digitalization of blockchain just makes it much easier to automate uh the Corum compared to quite manual voting processes um Beyond crypto um and interestingly rage crit uh coined by Mok Dow where you sort of opt into a dow but you can also opt out at any time and you you take your money with you that you uh um spent to buy in um is an interesting example of leaving executing

system uh which as part of these early results are still to be discussed how they relate to democracy and um also to mention foring sort of a way to exit the system um and yeah just to mention constitutions as well we have seen a movement of constitutions in web 3 used by some uh but again low novelty and sort of learning from democracy Beyond doubts not vice versa uh in terms of challenges um of course concentration of voting power uh we've seen that a lot an interesting study says um along the lines of most Dows start off unequal some Dows start off

with a fair launch but the study says that even those Dows launching fairly uh uh inevident um lead to a plutocracy again so these Fair launches are not persistent over time um um that's just a single study and um surely there's more research uh to be done on how to solve this but many many studies agree that especially defi is is highly highly concentrated uh regarding voting power and of course mostly subject to token rated voting uh also voter apathy um is a huge problem uh we we see low vter turnout and many doubts which I think led to the

introduction of Delegation uh introducing new problems again um but also non-private voting I think blockchain many blockchains are still public um by default uh ZK Tech is being explored um and some chains have that by default but I think most Dows the most significant Dows really have public a public track record of of votes and that is maybe um quite a obvious uh issue Beyond crypto uh to have solved uh but in blockchain not so we have lots of problems here um which again vice versa maybe Dow can learn from The Real World instead of Vice Versa um

governance exploits and hacks are are a huge topic as well we have an interesting paper um um pointing them um explaining them in detail and we have quite prominent examples like the Dow hack in 2 um 17 I think uh ultimately leading to the fog of ethereum and ethereum Classics so so yeah Dow exploits have been quite significant and we have many many more over the time um coordination challenges um for example um when you have onchain governance this is in the context of pseudonymity you have onchain wallets uh you know um and then what else do we have we have discour forums where you discuss again with shans we

have multiple time zones we have language barriers we have mostly asynchronous communication so all that um sort of inhibits coordination amongst human actors um contrary to maybe Democratic systems we are used to um and this is just making it es especially hard for democracy in the blockchain space um legal ambiguities um of course um DS are still not perfectly it's still not perfectly clear what kind of entity they are in many jurisdictions they may default to a general partnership where every RoR is liable it's still unclear are you liable if you wrote are you liable if you just comment are you liable if you just hold the vote uh the

token some there was an example or case study that you may be liable if you vote Yes but you're not liable if you vote no um this is just quite a mess and also inhibiting lots of people from actively participating for a good reason perhaps uh last but not least technical barriers and ux challenges is um as you all know uh crypto is not trivial and if we want to to have democracy everyone voting uh it needs to be very inclusive and ux uh barrier of Entry is arguably quite High um yeah and just as some bonus challenges they're not not maybe quite

related to this our findings but I think it's worth mentioning decentralization theater you may have read about that like um OB fiscated uh token allocations like the founding team coordinating with VCS and then on paper having lots of wallets holding uh a dist distributed amount of tokens but actually many of them coordinating and and building sort of uh a group that is is has the ultimate decision-making Authority and other examples of the decentralization theater for example in in Makow where sometimes run is seen as sort of a yeah ultimate decision Authority um many EX

many other examples apply uh a regulatory shield for Founders like our da is just a convenient vehicle for founding teams to push the liability to the a legality of a dow to these token holders out there just for Regulators who are still catching up um to think that these Founders are not actually liable um or governance tokens or unrequited security um very recent discussion now with the shift in geopolitics in the US um some Securities have arguably arguably been just labeled as a governance token without really wanting governance using decentralization theater so all this

needs to be taken into account when we want to make sense of what's real and what's just a shell marketing or a misuse of the term um yeah I'll come to questions in a second but um maybe just to um discuss these findings and um give some idea of what others are saying so this is Nathan Schneider um on the left hand side uh writing an interesting essay on on Democracy worrying a lot he's a a professor for media studies and in B and um really knowledgeable very early in the space and um yeah yeah just arguing for example that uh we we had

the chance to implement democracy for a long time and and in web one as well um uh The Cypher Punk movement ultimately did not really succeed um if we look at the internet today so blockchain also had this opportunity but sort of shifted to this more plutocratic VC driven movement which um yeah is is of concern to to lots of uh sort of more activist researchers in the space uh but I guess it can be said that um um the disillusionment is is universal and um yeah Kelsey nain and and um Dary Ellen arguing that uh Democratic governance um is not really

um able or supposed to transform existing structures but rather creates this um um Al illegal environment like um governance Beyond existing tions this this new space in in a legal sense um which is also controversial um point of view and in legal um literature but um also one way um we could see these uh mechanisms evolving into the future um yeah I'll come to questions and skip this um just the brief history of DS which uh was recently published by

um um the the Kev Kevin Kevin Oki and and colleagues um um but briefly on that makes it quite quite clear and interesting that we have um initially like early experiments like the Dow and then we had these Dow Frameworks like Aragon Dow St Colony like Dow operating systems sort of very comprehensive and and very thought through actually I really I'm really impressed by them unfortunately Z is not around anymore and colony has not really taken off but igen layer now is is is reusing colonist approach with a more reputation based non democratic mechanism and we see in the second phase very modular approach with

with snapshots of course um with um uh safe as a multi sick with um hats protocols for roles uh with Utopia labs for spending uh zodiac for making snapshot and onchain executable transaction coordinate for reputation so here you can see the modular infrastructure but I'll end here and see if you have any thoughts or question yeah I think we have time for one question yep you mentioned uh private voting as a concern and there's different levels of private voting for example encrypting the contents of the votes during the

voting period and then revealing them after words or keeping the contents of the votes uh private permanently um what are the pros and cons of different approaches and which levels of privacy have already been solved yeah I guess the best example is a shielded voting from shut Labs um I think maybe a default now in snapshot uh yeah that's a good question and um I'm not an expert on that particular question but I think we have the opportunity to to explore that and experiment um and I mean sity and privacy is is a is a bigger issue of of values and laws so I think every Dow can choose their own really and should have a conscious

discussion about that I think we're running a bit short of time thank you tedor big Applause [Applause] [Music]