On-Chain vs Off-Chain governance. What are the rules to Calvinball?

By Kurt Seifried, Chief Blockchain Officer, CSA

If you don’t know what Calvin and Hobbes is you can skip the next bit, but it is amusing.

Calvinball is a game invented by Calvin and Hobbes. Calvinball has no rules; the players make up their own rules as they go along, making it so that no Calvinball game is like another.Rules cannot be used twice (except for the rule that rules cannot be used twice), and any plays made in one game may not be made again in any future games. The game may involve wickets, mallets, volleyballs, and additional sports-related equipment.

If you are familiar with Blockchain governance then the rules to Calvinball may sound eerily similar.

Anytime we build a complex system it will need to be governed by rules. This is especially true for any complex system that involves humans and may need to be modified in the future. In effect, you will not only need rules to govern the system, but rules to govern the rules governing the system. Do you require a 51% majority vote to make a change? How many voters have to participate for a decision to be valid? What defines a voter? What defines a vote? How long are votes held for, how are they announced, who is allowed to initiate a vote?

This was the part where I started discussing on-chain vs. off-chain governance models and various technical aspects of them. But I realized it doesn’t matter that much, ultimately what it boils down to is a few core questions:

1. Where are the rules defined?
2. How are the rules changed?
3. Who enforces the current rules?
4. How do you create consensus?
5. How do you handle disagreements?
6. How do you build the incentives to support the above?

Whether or not this happens on chain or off chain we have one ultimate question: How do you build the incentives to support the above? Do you give the miners power? The holders of the tokens? The governance board for the Blockchain?

In general when it comes to building consensus and handling disagreements the least worst solution we have found is democracy, people vote, feel heard, and hopefully both the winners and the losers accept the results and continue on with their lives. When people refuse to accept the results we have problems, for example a Blockchain with a significant and passionate group that is opposed to a change may hard fork, effectively taking their ball and going elsewhere with it. Alternatively I have seen Blockchains attempt to create safety valves, for example allowing people who disagree with a change to close out their position and exit the market in an orderly manner, minimizing the chances of a hard fork.

Because ultimately Blockchain and any complex system that relies upon network effects to create value must foster and encourage consensus between the participants or else it risks pushing people away, and it’s not like there aren’t hundreds of other Blockchain projects people can participate in.

Interested in reading more about Blockchain from the Seifried Files? Continue reading the blog posts in this series here.