Is the current model of dReps in CIP-1694 a flawed concept?

[Neo_Spank]

Exploring DReps model of CIP-1694.

INTRO

As we advance Cardano into Voltaire age with CIP-1694 we are met with many unknowns. Process of creating a brand new form of governance that adheres to the vision of Cardano community while at the same time is efficient and usable is an enormous undertaking. And if we are being honest with ourselves, it will probably take multiple attempts, changes and tweaks to get it right.

Open discussions on concepts used in CIP-1694 is a way to help inform and strengthen this creative processes.

So in this post I am going to try to tackle some issues I have with concept of DReps.

Summary of CIP-1694 governance model

As far as I understand CIP-1694, the proposed governance of Cardano will be conducted (mostly) by 3 major groups. These groups are Stake Pool Operators (SPOs), Constitutional Committee (CC) and Delegated Representatives (DReps).

SPOs by default get a vote on some Cardano issues, such as new node software. SPOs choice to implement (or not) is effectively a vote, so it makes sense to recognize this and make it official. This makes sense to me.

CC seems to have a dual role. First as a transitional body where current legacy and founders control is transferred and stored while it is distributed and transformed to fit new governance protocol. As well as continuing role to provide checks-and-balances in new voting system in order to ratify Cardano constitution and decrease a risk of mistakes and centralization of power. It does this by ensuring no one person and/or group gets absolute control over decision making that goes against constitution of Cardano. It also provides smooth transition of power from legacy to Voltaire age. Lots of fine details to be worked out here, but overall it makes sense to have this.

DReps role on the other hand seems nebulous and a bit misleading. I am unable to clearly define their role due to inconsistency between description, functionality and expectations of that role.

DReps reality and expectaions

The way that DReps role is presented in CIP-1694 is basically like and SPO, except you delegate your governance voting power instead of your consensus voting power. DReps then are suppose to use this aggregated voting power to vote instead of you in governance matters. This gives illusion that it is modeled after representative democracy system present in daily non-crypto politics. This is false.

In regular representative democracy reps compete for a position that holds predefined voting power. For example, they represent one region in a national assembly. Once elected, they are expected to represent the whole region, not just the ones that voted for them. They all usually have the same voting power as other representatives and that power is limited in a way that one individual can’t just gain enough power to propose, vote and pass laws into existence by themselves.

Current DReps system is more of an example of special interest lobby groups running the system then representative democracy, since they only represent and use votes from only their supporters. Each DRep will have different amount of voting power.

Will there be a K-parameter limiting amount of voting power DReps gain? How do you check that your DRep X isn’t also DRep Y and/or Z? How would a network check that one person isn’t creating fake DRep identities to centralize all voting power?

When it comes to 1 Lovelace = 1 Vote we can’t assume that physical limitation (such as regional representation or population limits for that region) of regular representative democracy are just there. What we have to assume is that “if there is a loophole to gain power, some one will use it”.

Then there are issues with concept of DRep voting threshold. In order to ratify many governance actions there has to be a minimum threshold of votes from DReps on the proposal. Source: CIPs/README.md at voltaire-v1 · JaredCorduan/CIPs · GitHub

If we all give DReps all of our voting power and they DON’T vote it can paralyze the system. This means that DReps with significantly large delegations MUST vote (as in no choice to abstain) even in areas and issues they may know noting about. This in turn directly contradicts another part of CIP-1694 that states that :”DReps may choose to abstain to vote on parameter changes that are outside of their field of expertise. “ Source: CIPs/README.md at voltaire-v1 · JaredCorduan/CIPs · GitHub

Also, not using their delegated voting power reduces protocols resilience and makes governance attack vectors more feasible to bad actors. So, is it rational of us to expect every DRep to be involved in every decision?

New models for DRep role

It would make a lot more sense to create ‘regions’ of representation. All DReps interested and qualified to run for those positions have to compete with each other. Each “region” could have X number of DRep positions and each position gets the same voting power. Then the network holds elections for DReps for those positions and the ones with most votes get those positions and represent everyone’s interests, not just one groups. These regions can be based on CIPs Protocol Parameters groups as defined as well as add other ‘regions’ that need governance. This effectively specializes DReps requiring them to be informed only about their area of expertise instead of expecting every DRep to be involved and know everything about every Cardano issue… all the time. We can expect that such specialization model will give us higher quality results due to in-field expertise as well as better turn out on voting. Thus, having better network resilience to attacks.

Another benefit of such model may be increased pool of Cardano community members that are available to commit their time to governance, since some ‘regions’ will be part-time commitments. It also allows the network to identify and place different incentives for different DRep ‘regions’ if we are short on DReps. For example, we may have many DReps competing for unpaid position of economic DRep while we have to pay incentives to get qualified research DRep (just an example ).

An alternative could be that every delegated wallet is considered as an independent (just votes by itself), unless you register as DRep so others can delegate to you. This way any ADA holder will be able to vote even with out a DRep, just by having a wallet (no other actions needed). It is basically a mix of representative democracy and direct democracy in one system. This way if DRep experiment fails, we instantly have direct democracy as base until we decide to build something else. And if DReps method catches on we will decide to go representative route just by our voting habits instead of some grand plan for one system or the other.

Conclusion

Unlike real politics, digital governance has no clear physical boundaries nor does it have tangible realities of human condition that restrict possibilities on what can be done. This is a great thing as it gives us many options that were not available before. However, it forces us to also create some boundaries in order for the new system to be secure, fair and efficient as possible. Placing those new boundaries on the correct spots may make a difference between stagnation or mass adaption. So lets ask a lot of questions while we still have a benefit of a new beginning.

Also, we have to keep in mind that this is a brand new system. We don’t have to just copy some crappy method of governance because that’s how it was done so far. We can build what ever works for us as a community and if its very distinct from any other system out there we’ll give it a new name . Don’t limit yourself with trying to fit predefined concepts if they don’t work for us, just put your energy into building what works instead.

[TOPO_Pool]

@Neo_Spank

everything about every Cardano issue… all the time. We can expect that such specialization model will give us higher quality results due to in-field expertise as well as better turn out on voting. Thus, having

Good write-up. However, giving power to a person that has to compete to “win votes” opens up the network to nepotism since they could afterwards do whatever they want since now they get to decide for ALL of the community.
In that sense, I like better that the dReps only represent those who explicitly delegate their voting power to them.

[Neo_Spank]

@TOPO_Pool

giving power to a person that has to compete to “win votes” opens up the network to nepotism since they could afterwards do whatever they want since now they get to decide for ALL of the community.

They wouldn’t be deciding for all of the community. As I pointed out it would be X number of DReps per ‘region’ (or area of specialization) , so their vote would be just one vote of many. One person could never decide for all by design of having X number of DReps per ‘region’. This exactly prevents having one person decide for all of community.

@TOPO_Pool

In that sense, I like better that the dReps only represent those who explicitly delegate their voting power to them.

Unlike in a model I proposed, delegated vote model in CIP-1694 can cause one person to become in charge of a whole network. There is nothing stopping one DRep of gaining 51% of all votes available. Not only that, they can do it while no one knows they are doing it because there are currently no ways for network to check that 100 DReps aren’t just one DRep with 99 fake identities. There is NOTHING in this model that can stop simple fake identity scams from abusing this system and gaining majority of power.

Further more, exchanges control billions of ADA. They can easily just assign one (or many) DRep(s) to represent their interests in the network and as of now exchanges have direct control of about 4 to 5 billion ADA. That’s only from what we can openly see. That would allow exchanges to easily pass anything. Even if they use those votes to sell out Cardano network in order to please the regulators.

If you area actually worried about one entity or group deciding for ALL, you shouldn’t want delegated vote system of CIP-1694 type. Because once it’s implemented and those entities gain control, there no way way to revers it. It’s either their way or stale mate through no confidence votes.

Both direct democracy or creating numerous specializing voting groups that are elected prevents centralization of power by design.

[Marklaw]

@Neo_Spank

Further more, exchanges control billions of ADA. They can easily just assign one (or many) DRep(s) to represent their interests in the network and as of now exchanges have direct control of about 4 to 5 billion ADA. That’s only from what we can openly see. That would allow exchanges to easily pass anything. Even if they use those votes to sell out Cardano network in order to please the regulators.

You raised a good point about the exchanges as for their own financial interest, it may be incentivised to assign their own dReps whereby they are not vested to act in the long term interest of Cardano.

It would be beneficial to implement a bill of rights and responsibilities for each dRep, and extend with different conditions for CC members and SPOs that they are required to act in accordance to the holistic and longer term growth of the Cardano ecosystem.

While implementing a bill of rights and responsibilities would assist in the selling out of the Cardano network, it seems necessary that a judicial system will be required in the near future to stamp out any acts that impede or jeopardise the Cardano network, whether it is for foreign or nepotistic gains.

As there is an increasing number of alternative sources of media emerging within (and outside) of the blockchain space, this addresses biases and misinformation from journalistic reporting. With the prospect that the price of ADA increases to the extent that the treasury can purchase or develop its own independent media systems to stamp out fake news. This allows for individual ADA holders to be more informed and therefore vote with accuracy. Individual voting rights may even be less corruptible than dReps as the latter may have delegations that have vested interests away or in combination with Cardano.

I believe that a combination of direct and representative democracy is optimal in preserving decentralisation in the Cardano ecosystem. For such reasons above, I propose the model for individualistic ADA holder voting rights to be implemented that includes with the same voting capabilities as those currently pertained by dReps.

[Christopher]

In my view, despite dRep criticisms, the dRep system is still in its early stages of development, and it is possible that some of the concerns raised can be addressed. For example, the Cardano Foundation has proposed a number of measures to prevent centralization of power, such as requiring dReps to hold a certain amount of ADA and to disclose their identities. It is also possible that the dRep system could be made more transparent and accountable to the community.
However, if the system is not designed and used carefully, it could lead to centralization of power, corruption, and other problems.

[HeptaSean]

@Christopher

such as requiring dReps to hold a certain amount of ADA and to disclose their identities.

That makes it worse!

If I do not want to delegate to one of these dReps, I always have to have the possibility to just register as my own dRep. If that is gatekept by an unreasonable high amount of ADA for registration or by a requirement to disclose my identity (WTF?!?), I am forced to delegate to one of those although I do not trust any of them one iota. That’s unacceptable!

[Christopher]

I understand your frustration; I do not think there will be a need to register as your own dRep since you can do the voting individually without delegating your Ada to a dRep. It is not mandatory to delegate; hence, you are not being forced to do the delegation as stated in your submission. I fully agree with you on the issue of trust in finding a trustworthy dRep and also talking about the guarantee from dRep to represent the interest of the community. I believe despite the challenges, the dRep functionality is a vital part of the Cardano project which allows token holders to participate in the governance of projects and ensure alignment of community interest.

[HeptaSean]

Nope, CIP-1694 in its current state has no mechanism whatsoever to vote yourself without delegating to a dRep.

The only possibility to vote yourself is to register as a dRep. Period.

And I personally do not think that the concept of dRep has any value at all – neither in Catalyst nor in Voltaire. Without an established landscape of political discourse and election campaign it is just shifting voting power randomly to guys who are deemed likable for whatever reasons. It is horrible.

But if people want it. shrug