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DAOs, Procedural Perversity and the Metaverse | Holland & Knight LLP

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The problem of procedural perversion

Mathematician, logician, and philosopher Kurt Gödel is said to have discovered an “inner contradiction” or loophole in the US Constitution while studying for the citizenship exam. A formal formulation of this contradiction was never put down on paper, but it has been suggested that its content has to do with the fact that Article 5 of the Constitution, which describes the process of constitutional amendment, is applicable. . itself.

In particular, Article 5 contains explicit limits on what the Constitution can amend.

“…but no amendment made prior to 1888 shall in any way affect Sections 1 and 4 of Section 9 of Article 1, and no State may, without its consent, was deprived of equal voting rights in the Senate…”

Since Article 5 does not expressly prohibit the application of itselfHowever, the procedural barriers to constitutional amendment itself can be removed, greatly increasing the likelihood that the constitution will be amended. Gödel, a fugitive from Nazi Germany, was understandably terrified of this possibility, and the weakening of safeguards against amendments by Article 5 could easily turn the democratic model of electoral autonomy into tyranny. I was worried that there would be

Putting aside the merits of Godel’s fear, Godel’s loophole is that we The problem of procedural perversion, if self-governance procedures are not adequately protected against possible villains. But the problem of procedural perversion is not confined to the U.S. Constitution, but can manifest itself in any system of self-government, especially if it was not drafted by authors as prominent as the Founding Fathers. It is so in

Procedural Perversions and DAOs

Consider a distributed autonomous organization (DAO). It is a form of self-governance based on smart contracts in which governance power is distributed among participants rather than held by a single, discrete, centralized entity. One prominent example of a DAO is the Decentraland DAO, which oversees the governance of the Decentraland metaverse. Decisions regarding the DAO’s governance are made through a series of his three votes. In this case, in order for a proposal to be advanced and ultimately adopted as governing, it must meet the minimum level of voting power and achieve a simple majority of votes on each ballot. law. Each Decentraland participant has a vote based on ownership of mana (Decentraland’s cryptocurrency), land, and name. Once a governance proposal is voted on, Decentraland participants will have the opportunity to vote on the proposal within a set period of time. If a sufficient amount of voting power is utilized and a simple majority of votes in favor of the proposal is reached, the proposal will be advanced to the next ballot in the series. Alternatively, if the proposal reaches the final vote in the series, the proposal has been adopted as law in Decentraland. If the proposal does not reach sufficient voting power, or if the votes supporting the proposal do not reach a simple majority, the proposal will be rejected in a series of votes.

In particular, Decentraland’s use of Voting Power itself aims to address the issue of procedural perversion associated with account-based voting systems, where each blockchain address gets one vote. As described in his DAO guide for Decentraland, if the votes were distributed to give each blockchain address one vote for him, a malicious person could simply create thousands of addresses. May try to subvert his DAO voting system. We can prevent this by moving to a voting system based on voting rights. By itself does not increase personal leverageOf course, making decisions based on voting rights creates a system in which some individuals have more influence than others. By simply purchasing millions of her MANAs, an individual can obtain more voting rights than an individual who owns only one her MANA. But voting-based systems arguably distribute leverage in some plausible way. This system gives individuals a say in how the world is governed. directly proportional to the extent to which they have invested in the world.

Of course, this is not the only area where procedural perversion problems can arise in DAOs. For example, consider that under Decentraland’s terms of use, intellectual property disputes are decided by a vote by the Decentraland DAO. However, the Decentraland DAO and the terms of use do not allow interested parties to purchase exorbitant amounts of mana and use it to dispose of it when a dispute over the intellectual property in which they are interested is presented to the parties. Nothing seems to prevent you from using it to your advantage. Decentraland DAO for decisions.

There are potential problems similar to those feared by Gödel. The previous example involving Gödel’s loophole was one in which the procedure for constitutional reform itself could be applied, thereby removing barriers to constitutional reform and greatly increasing the likelihood of a dictatorship. Similarly, the Decentraland DAO does not appear to contain any bars limiting the application of its voting mechanism to the passage requirements of governance proposals. Governance proposals may therefore revise the minimum thresholds for passage of governance proposals, for example, which may go against the intentions of the original DAO authors.

Evaluation of loopholes

Of course, each of the diagrams above show that the DAO procedure can be subverted via loopholes, but while they are related, does that loophole represent a substantive problem to fix? Whether or not is another matter. For the purposes of this blog post, we will not delve into loophole utility analysis. However, a good analysis should include, among other things, 1) how likely it is that the loophole will be exploited, 2) how catastrophic the consequences would be if the loophole were exploited, and 3) the benefits of maintaining the system. It seems to me that it should be considered. loophole. Furthermore, while it may be tempting to analyze the DAO in direct comparison to the real-world democracy upheld by the U.S. Constitution, the DAO differs from the typical real-world constitution in important ways, so its Note that such an analysis has limitations. Method.

For example, looking at the Decentraland DAO:

  • As previously mentioned, unlike real-world democracies, individuals can accumulate voting power based on their degree of ownership in the system. This is in contrast to most real-world elections where votes are restricted to specified citizens of a country and an individual, regardless of owner, is restricted to having only one vote for him.
  • Unlike many real-world democracies, DAOs such as the Decentraland DAO involve direct voting, where individuals can vote on individual issues to determine governance outcomes. This is in contrast to representative voting systems, where individuals primarily vote for representatives to determine governance outcomes.
  • Unlike many real-world democracies, voting in the Decentraland DAO can be anonymous or non-anonymous. For entities with identified blockchain addresses, voting is never anonymous. This is because, at least in Decentraland, voting is partially mediated by snapshot tools. The snapshot tool exposes how all blockchain addresses voted for a particular proposal and how much voting power was consumed. At the same time, voting is anonymous for entities whose blockchain address is not publicly identifiable. As a result, unknown entities can have undue influence on governance outcomes.

It is unclear how these differences affect the analysis of the DAO’s procedures, but the Decentraland DAO allowed anonymous entities to buy out exorbitant voting rights and vote directly on issues of adverse interest. The fact that you may have some reason for concern.

Representative DAO vote?

In particular, Decentraland seems to address some of these issues by encouraging things like: Representative voteUnder the delegation program, citizens of Decentraland can delegate their voting rights to one of a number of designated delegators. Delegators are selected based on applications that contain specific information about the delegator. The intention of the program is to “promote healthier living. [Voter Power] Decentraland’s more passive participants actively participate in the governance process, Interested in Decentraland’s successDelegates are chosen by the participants of Decentraland based on the delegates’ ratings, so it is almost certain that delegate votes somehow reflect the views of the Decentraland community as a whole. Moreover, if delegates with good intentions and an impartial interest in Decentraland’s governance are elected, this will reduce the impact of possible procedural perversions, especially when delegates control a very large number of voters. seems to alleviate.

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