How to Prevent Cardano Domination?


#1

“How Will Cardano Prevent the Concentration of ADA/Governance Power in the Hands of a Few ADA-Stakeholders?” This is a question I’ve seen frequently; so, this thread is dedicated to answering that question and exploring all the implications associated with this topic.

Weak Institutional Integrity Creates Economic/Political Power Concentration. One of the most significant reasons that financial power concentration occurs in non-ADA-based markets and societies today is because politicians in national governments with weak institutional integrity (e.g., the USA, UK, Mexico, most African countries, and virtually all countries with high Gini coefficients) invariably design their laws, industry regulations, banking systems, and political systems to favor the rich because it’s the rich who fund their political campaigns. The institutional structure of their governments actually creates incentive structures that make economic/political power concentration inevitable.

The Vicious Cycle of Institutional Structural Bias. All this might seem intuitively obvious to many people, but to understand specifically how/why Cardano can resolve the economic/political power concentration problem both in the real world and within the ADA currency market, it’s useful to understand the precise mechanisms that perpetuate the financial and political power concentration in many countries today. It begins with a vicious cycle of institutional structural/systemic bias with the following characteristics:

  • Tax-breaks and income-shifting opportunities for already-wealthy individuals and corporations that enables them to evade/avoid tax liabilities, which amplifies and perpetuates dynastic wealth accumulation.

  • Captured regulatory regimes that systemically encourage and perpetuate the economies-of-scale that perpetuates the dominance of the largest corporations (e.g., the 10 largest corporations on Earth today wield more economic power than 92% of all countries combined); which leads to. . .

  • Concentrations of financial and broad economic power into a tiny number of so-called “too-big-to-fail” banks.

  • Monopoly Market Power. The banks then convert their increased financial power into monopoly market power to kill competition, engage in coercive acquisitions of smaller companies, and gobble up ever-larger swaths of economic activity throughout an economy.

  • Wealth Transfer. As the banks grow in size, power and influence, they systematically transfer wealth from the general population into the accounts of the banks’ executives, shareholders, and their wealthiest corporate and individual clients.

  • Debt Bonanza. With favorable regulations, market monopolies, and access to cheap money from the Federal Reserve, the banks exploit the fractional-reserve banking system to cram as much debt as politically possible down the throats of citizens.

  • Loss of Economic & Labor Power. As the society drowns in debt, the general population loses their economic and labor bargaining power vs. the largest banks and corporations, thereby perpetuating the cycle of economic power concentration in the hands of a few.

  • Loss of Political Power. As the society loses their economic power relative to the banking system and large corporations, they lose their political power over the laws and regulations that govern their society.

  • Neo-Feudalism Emerges. With economic and political power lost, the society is powerless to escape the economic and political oppression because the government is no longer operating based on democratic principles. Instead, it’s operating based on a form of feudalism, in which the largest banks and corporations have taken control of the society and its means of production, leaving scant wealth creation opportunities for the general population.

  • The Cycle Continues. To thank the politicians who provide all those systemically embedded benefits above, the beneficiaries of those benefits (those who are already rich and powerful) return the favor with a never-ending river of political campaign donations to keep their favorite politicians in control of the regulatory, taxation, legislative, legal, and electoral systems. This is what enables them to block democratic institutional reforms. So, the cycle continues.

How Does Cardano Resolve All Those Problems? Among other features, Cardano stake delegation enables individuals and societies to efficiently pool their ADA to offset the concentration of ADA stake power in the hands of a few large ADA stakeholders. Thus, the stake delegation process enables millions (eventually billions) of people to pool their ADA democratically to offset the power of the largest individual stakeholders.

Can’t the Whales Pool Their ADA, Too? Yes, the largest stakeholders can try to fight the ADA masses by pooling their ADA together, too, which is what happens in corrupt and dysfunctional economic/political systems today. However, the key difference in Cardano Land is that there are no politicians to corrupt, no institutionally biased laws and regulations to manipulate, and no structural incentives for the vast majority of the ADA stakeholder population to collude with the whales or attack, hijack, and undermine the integrity of the system. So, ADA pooling does not have the same nonlinear corruption amplification effect that financial power concentration does in today’s easily corruptible economic and political systems.

Visualizing the Worst-Case Scenario. Given the law of supply and demand, it’s extremely unlikely that any entity, including most governments, would be able to acquire enough ADA to control 50%+1 of the global ADA stake before the price climbed and made their acquisition campaign too expensive. Nevertheless, it’s theoretically possible that some perfect storm of events (e.g., discovery of a temporary security flaw/glitch in Cardano, combined with a nasty bank lobby campaign, and a government(s) making it illegal to transact in ADA . . .) could hit the price of ADA very hard. That would create a great buying opportunity for some deep-pocketed malicious actor(s).

The Cardano Bill of Rights Prevents the Worst-Case Scenario. Every democratic system contains the seed of tyranny by empowering a majority to oppress a minority. The U.S. Founding Father’s resolved this issue by codifying a legally binding Bill of Rights, which is why I proposed the “Cardano Bill of Rights” previously. Without a Bill of Rights (and perhaps a broader Constitution), there is no technical or sociological way to prevent the worst-case scenario; and our community will live in perpetual fear that the worst-case scenario is just one perfect storm away from destroying humanity’s future in Cardano Land. (Later, I will post some example provisions on the “Cardano Bill of Rights thread”, which I think are essential to preventing the worst-case scenario described above.)

Community Alignment is Embedded within Cardano’s Architecture. As more and more ADA stakeholders join our community, the interests of an overwhelming majority of them will be aligned with creating a stable ADA currency and a vibrant global community. Why? Because nobody wins by gobbling up a bunch of ADA and then nuking Cardano Land, except for banks, governments, and a few unscrupulous early competitors. That means we only need to worry about a relatively small group of potential adversaries, which is why I wrote Blockchain Patent War Coming.

Cardano is the Community and the Community is Cardano. With the risk of ADA market concentration substantially mitigated as described above, we can focus on the more fundamental process of eliminating economic/political power concentration in our societies without sliding into communism. The only way to do that is to be a community that humanity wants to join, based on laws that deliver true justice, and an economy that distributes value in societies equitably and sustainably.

Those are a few thoughts to consider with respect to the “ADA power concentration” issue. Hopefully this helps to allay various fears and concerns that I’ve seen in some other threads. Looking forward to more thoughts and ideas from our lovely community.


Will ADA Whales Ever Give Up Their Power?
#2

I like the way your mind works, you write like a Wikipedian :slight_smile:

Discussing this type of safeguards is essential (and a more logical point to begin than AI :wink: )
A Cardano Bill of rights could be an excellent solution. We will need to find ways to put such safeguards on paper, but more importantly, on Blockchain.

I’m guessing a think tank that will map all the “Doomsday Scenarios” and propose possible solutions is what’s needed here. You know anyone? :wink:


#3

Our community is the think tank! :slight_smile: I don’t think we need anything more formal than what we have here already because organizing the legal and organizational structure of a think tank adds unnecessary overhead and bureaucracy. And it’s not necessary because all good ideas from our community will naturally percolate into the project and the team will integrate them into Cardano in due course.

Yes, all contracts (including the Bill of Rights, Constitution, and other accountability measures) are always assumed to be stored on the blockchain and automatically enforced by smart contracts powered by CardanoCL (the control layer) after it’s released.


#4

Overhead sucks! :slight_smile:
Well then, I guess we need a " CBOR : Possible Doomsday Scenarios" thread :smiley:


#5

Thank you for the very well put elaboration. Many interesting points here, where to start!

First of all, I would start by saying that you are basing your arguments on the premise that humans (“common” people) are inherently good in nature. Now this is a very difficult philosophical problem to address, even more so because we take it for granted that it should be like so, because I am a good person, therefore others should be good as well. So I would add to your Worst-Case Scenario: community itself becomes corrupt, working as a “hive mind”, blindly following the majority. This I think should not be underestimated nor excluded as an option, since it has been seen throughout history.

It is very common in MMORPG games that this phenomenon occurs, called “zerging”. A small group of players starts accumulating followers, and as more and more people join the hive mind is formed. This creates an imbalance of force and power, and instead of everyone doing their best to defeat an adversary and solving a common problem, they focus on following the zerg. So this comes down to the psychology of the masses. A question should be asked: under what circumstances does a community turn in against itself? This is of course a passive process, because it is not in anyones interest to harm the community. However, too much order isn’t good either. The next question follows: how do you spilt the zerg? In other words, how do you make players to cooperate in a more productive way, without following the path of least resistance, which zerging in its core is.

Secondly, what is true justice? By whose standards? Does the community decide? If we all have equal rights, do I get the right to veto a proposal or decision? Of course if I had a big enough stake I theoretically could oppose the majority, if of course it did not violate any laws of the system. These are all complex questions, and I don’t in the least claim to have the answers, I’m just trying to grasp the intricacy of the dilemmas.

Thirdly, do we comprehend Cardano as a decentralized entity, or as a collective of individuals?

A decentralized entity should be expected to work with multiple, say, domains of different functions. It could use sidechains to distribute power based on competence, for example: in a country each government body, public services and institutions, scientific facilities etc. would operate on a sidechain. When a decision is to be made by any given sidechain that is to contribute to the society, a vote would be held. There would also be the stakeholders themselves forming a chain, if they would not already be a part of a sidechain. Each sidechian would have equal rights, and the vote would be passed based on majority. In return, a reward could be awarded to the chain who got their proposition voted in favor, as to keep the level of competence required to run the delegated tasks. The stakeholders would be the ones to vote on the delegates within the chain, and also the blockchain as a whole. There still is a possibility of a 50%+1 attack though. Im not saying that sidechains work in this way, I just used it as a metaphor.

If, on the other hand, Cardano is viewed as a collective of individuals, it would be in each individuals hands to decide on certain propositions. They could form pools and elect delegates, but this may lead to confirmation bias and search for like-minded individuals to form groups. How can we guarantee that this wont lead to continuous conflicts of opinions?

Ultimately, you are right in saying that we as a community need to make sure that the rest of humanity wants to join in, and show them that there is a lot of potential behind the philosophy of the project!


#6

Dear @Dantalion, I very much enjoyed your comments. Let’s see what we can explore here together. . . .

Nope, I definitely did not. I’ve been on this planet long enough to not make that false assumption. Nice try. :slight_smile:

We Don’t Need Faith in Human Nature with Cardano. I don’t have faith in human nature at all. My confidence in Cardano is based on a technical understanding of the incentive structures that Cardano shapes and the corresponding institutional/community accountability that it automatically enforces.

I already included that risk in my original post when I said “Every democratic system contains the seed of tyranny by empowering a majority to oppress a minority.” This is exactly why I mentioned the Cardano Bill of Rights several times.

Communities don’t turn against themselves. Individuals with malicious/selfish intent turn against their communities. Everything I’ve written in this thread is predicated on one core assumption: CardanoCL-based smart contracts will eliminate virtually all of the subjectivity associated with corruptible human institutions today. Anybody who doesn’t accept that assumption will have a difficult time appreciating Cardano. (I’m not saying this to you specifically; it’s a broader observation.)

Based on what framework are you making this claim? An immutable transaction settlement system that completely prevents any subjectivity whatsoever is certainly good from the perspective of creating a trustworthy economy and a just society. Thus, the ideal level of “orderliness” in a system is dependent upon our goals for the system.

For example, if we want to inspire creativity at the application level (CardanoCL), then we should minimize how much order we impose upon developers by giving them virtual machines based on the K framework that can interpret and compile any programming language they want to use. In contrast, if we want high-integrity politicians and institutions, then we should maximize the order that we impose on their incentive structures.

This is already inherently built into Cardano’s architecture, which automatically aligns the incentives of virtually the entire community toward supporting the platform in many ways. Only a small number of adversarial groups do not have these aligned incentives. I’ve written about this in some of my other posts.

These are all core questions that have already been addressed within the technical architecture of Cardano itself. I’ve also written a lot about many of these issues elsewhere. Bottom line: “Justice” only exists to the extent that a particular outcome is desirable to a sufficient number of humans (usually a simple majority) to avoid pissing off too many humans, and thereby, causing a violent revolution and perpetual socioeconomic instability.

Nothing in Cardano Land says we all have equal rights. In fact, it’s clear that any Poof-of-Stake algorithm, by definition, creates different levels of power based on different levels of stake. This is why I posted “Cardano Bill of Rights”.

Most decisions in life are not truly constrained by false dichotomies, all-or-nothing logic, and either/or choices, but the human brain seems to be very good at injecting this illusion into human decision-making. In this case, Cardano is neither a purely collective nor a purely decentralized community–we are both, depending on what layer of the system and corresponding community we are examining at any given moment. I can cite many examples of this, but you’re a bright guy; so, I think you get the point.

The underlying systemic design of Cardano already addresses the issue of conflict resolution. In fact, this is the issue addressed by every democratic framework/system/government since 1776, but all other democratic systems have failed to achieve and sustain truly broad-based consensus-building and true justice because they don’t have the incorruptible incentive structures and immutable transaction integrity of Cardano. However, the primary issue here is the “tyranny by the majority” problem, which I’ve already addressed.

Thanks again for your thoughtful comments. Back to work I go. . . .


#7

The history of the real Bill of Rights shows that it is not enough to spell out rights for individuals, or in a more general sense, to carve out certain immutable principles. The system itself has to be designed so that it cannot violate those principles, and has no easy way to evolve to do so.

For example, when the federal government had little to no revenue, it was physically unable to violate the 10th amendment or impose other regulations on a large scale, but once it was able to do so, the Bill of Rights was pushed back by inches.

Therefore, I propose that there should be no mechanisms programmed in that can be repurposed to violate Cardano’s principles in the future.

I would also propose that the governance system be split up so that software updates can be implemented with majority vote, but changes to the core algorithms / API requires a supermajority, and certain features like reversing transactions are entirely impossible. HOWEVER, I don’t know how that could be implemented, since all of the above consist of first order data objects in the wallet / node software.

I also doubt a supermajority requirement could be enforced. The point of democracy is to prevent violent revolution by allowing the most organized faction to take power peacefully. In this case, it’s best to let the 50%+1 have their way, or exit.

Re: Zerging, perhaps a parliamentary system or a federalized system of some kind would be more effective than a winner-take-all election system.


#8

Excellent point.

I agree with “the point of democracy” part, but if supermajorities are ineffective, why does almost every country on Earth have a supermajority threshold in their constitutions for critically important amendments? (I once had to study 146 constitutions; so, I’ve been thinking about this for a while.) :slight_smile:

Without supermajorities, the tyranny by the majority is inevitable. And as we we’ve seen in U.S. presidential elections in 2000 and in 2016, slight majorities do not create broad support for winning candidates or their legislative agendas.

This is also why functional, multi-party parliamentary systems typically form grand party coalitions so that the government has a broad mandate that is supported by much more than a simple majority of the citizenry.


#9

Clearly you have much more experience than I do in general with these things, so your knowledge is greatly appreciated. I have just recently found out about Cardano and I have much to learn and investigate, I’m very excited about that.

I apologize for misinterpreting your statements, it is a common thing when not communicating in personam :stuck_out_tongue:

I support your confidence in the technical aspects of Cardano, but ultimately aren’t there humans behind every decision made? Unless an automated system is created which is self-regulating and self-sustainable (which is certainly a possibility in the future) there will always be human hands in the process. It is not Cardano’s base structure I am questioning, but rather the fact that someone has to create that structure. There is however great comfort in that the programming language used is very mathematically based, which mitigates the possibilities of human error.

Regarding communities turning against themselves, let me rephrase my initial point: I was thinking more in the sense that the community starts to make wrong decisions, although they at first might not appear as such. Say for example in Nazi Germany, the collective thought believed it fought for a greater cause, deluded by the tyrannical few, because they wanted something new, and powerful. This notion of doing good for the community was deeply rooted into the collective subconscious, while it was much the contrary. Yes Hitler had malicious intent, but certainly it is in the hands of the nation to choose its leaders. I guess the question is wherein lies the responsibility.

This example is related to the “too much order isn’t good” assumption as well. In tyrannical systems order is imposed deliberately to sustain control, so too much order may lead to system failure on many different levels, as opposed to too much chaos in uncontrolled systems like anarchy.

I think the movie The Matrix gives a great example for this: the Matrix is a more or less centralized system but with multiple layers governed by programs who where selected or created based on their competence. The program called Agent Smith was lets say delegated to impose order, but he began imposing “too much order”, and in turn deluded itself into thinking that it is superior to others precisely because of its power for order. The Architect took full responsibility for Smith’s actions, but this is because in centralized systems responsibility is structured as a hierarchy (ideally), or am I mistaken? Whereas in decentralized systems, who bares the responsibility for system failure? I guess that’s what I was trying to get at…

I will have to think more about the idea that Cardano is both collective and decentralized community, but I get what you are saying.

Thank you for clearing things out, I would also like to comment on your CBR, but for now time calls for other obligations :smiley:


#10

Probably only a side note, but maybe it should not be underestimated: Let’s assume ordinary people who lived for decades in a representative democracy, now can participate in direct democratic decisions. This requires not only more involvement (you have to know what you decide)
People also have to learn that direct democracy does not mean everyone is always right and get what he voted for. (the more someone spends time to get involved the more convinced he’s about his opinion)
So far nothing new and nothing special for digital/crypto communities.
What makes the crypto communities a little bit unique compared to country/nation based democracies is that its way easier to leave them when you are not on the winner side. This can be a permanent or only a temporary averting. And also this at first glance is good because it means liberty and freedom of choise.
This, however, also encourages the emergence of isolated islands. (don’t expect that at the end of this crazy current months, there will be only one digital coin) And then we’re not far away from things we’ve seen some decades ago. Very very bad things.
Bad things that happen because the groups/troops became formed and distilled before, and each one only wants the best for itself.


#11

@Dantalion I appreciate the way your mind works. We all have a learning curve and this community is useful for polishing our rough edges and filling in some of the gaps within the Cardano documentation. However, having a strong foundational understanding of the underlying technical principles in the Cardano documentation really should be your first step on your journey.

The Limitations of Analysis by Analogy. Analogies can be very useful to convey complex ideas, but there are significant limitations in any analysis by analogy. Understandably, people are often forced to fallback on analogies until they fully understand the underlying principles, but analogies are often incorrect representations of how life and systems work; or, in this case, analogies often contain incorrect assumptions about Cardano’s architecture, risks, and capabilities.

Keeping Our Ideas Precise and Concise. Each person’s level of technical experience is different. Many of your questions are at the intersection of technical architecture and philosophical contemplation, but without a strong technical background (or at least a strong understanding of the core technical concepts), some principles can be difficult to communicate without a long chain of analogies. But this is not the place for that because we need to keep our posts as precise and concise as possible so that others can learn from us as efficiently as possible.

How Can Fallible Humans Create Infallible Systems? This is the implicit question at the heart of many of your comments in this forum so far. It’s not always easy for philosophically curious, (relatively) non-technical people to really believe that smart contracts can be designed by fallible humans while simultaneously being impervious enough to human fallibility for us to have substantial confidence in the integrity of the systems. Programmers understand this easily, but non-programmers are often skeptical because they may not really understand how a system designed by humans can result in relatively unbiased outcomes.

How Should We Engage Complex Systems? Most people don’t need to care about all the complexity of Cardano, but people like you who are philosophically curious have a yearning to understand things on multiple levels. I do, too, and there are many people like us in this community, but we’ve all paid the price of admission by studying the technical docs for days or weeks first before jumping into the philosophical aether. So, I think you will achieve the clarity you seek if you spend more time studying the technical docs at the link above. That will give you a common language and baseline technical understanding, which will make it much easier and more interesting for our community to engage you on multiple levels.


#12

Thanks for the heads up, I will look into it thoroughly!

Yes I understand I am a skeptical person and that this could backfire in the community. I am a student of animation at the Academy of fine arts in my hometown, so as an artist I am inclined to question the things I observe probably a bit more than others. But since my father works in the field of robotics and autonomous systems I have always had a great interest in those subjects, I’m just not much of a technical person as you’ve mentioned so I sometimes have hard times understanding certain concepts.

Nonetheless I am glad that there are people like yourself in this community that are here to shed the light for those who are less informed in the matter, your care for broadening of my knowledge is greatly appreciated.