Lets have a discussion about the Governance (BFT) keys

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Lets discuss a topic that unfortunately has not attracted much attention, but in my opinion is extremely important. This topic is about the so-called “governance” keys, also called BFT-keys, which have a lot of power. My request would be that IO should relinquish keys back to CF and governance operate as before. But lets start from the beginning.

7 governance keys were distributed to the 3 founding entities at the beginning. 3 of them went to IOG (former IOHK), 2 to Cardano Foundation and 2 to Emurgo. To make a decision, 5 of the 7 Keys must agree. This also means that IOG has a de facto VETO right.

For whatever reason, the keys from the Cardano Foundation were “delegated” to IOG. That means IOG has been single-handedly (since they now control 5 Keys) able to make parameter changes or withdrawals from treasury/reserves for a while.

Cardano Treasury with Kevin Hammond & Jared Corduan - April 20th, 2022 - YouTube (2:51–7:41)

While I do not doubt the intentions of IOG, the concern why the distribution occured was - Single entity could decide to empty the treasury/reserves/introduce changes without any authenticity, and EM/CF/community could do absolutely nothing about it (besides more plausible case could be keys leaking into wrong hands from a mishap, which is more likely in a single org than across).

However, my goal is to start a discussion whether this status as it is now is still justifiable or not and also why all 3 founding entities agreed to this process at all, to give up a basic principle of the fundamental agreements for the creation of the protocol like this and this was also hardly communicated anywhere.

My opinion on this subject is clear. For me personally it is an absolute no-go if an organization has so much power. That’s exactly why these keys have been distributed to these 3 founding organizations, so that not one of them alone can make such far-reaching decisions.

Sure - there are plans to rectify this for future fork (assuming in next 6 months) but given the behaviour - it becomes very difficult to believe there is a trustless system, given the extent to which protocol security has been risked purely based on management agreements , leaving the Cardano community as well as other stakeholders in the dark.

I am aware of the fact that this is a delicate topic and possibly also offers a target for other projects. However, I am convinced that we can only develop further if we discuss such unpleasant issues together in a transparent way.

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by interesting coincidence, this just released today (I’m citing in hope this may help establish a context for the requested discussion) :face_with_monocle: …

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Hi @Zyroxa

First, before I comment on this topic, I would like to say thanks for offering a free education about Cardano community to crypto YouTubers. :+1: :wink:

I understand that everyone wants Cardano to be a perfect example of what crypto should be right at this moment. However, I feel that the reality is that Cardano is not finished yet.

What I mean by that is that Cardano is still very much in a process of being created to become what was promised at the start. Since Goguen era just finished that means that Cardano is only about 60% complete. In my opinion, until the project is fully complete (as set out in the road map) there is no point in having some kind of exercise in governance. The stages must complete before community can/should start changing them.

We all understand that each crypto network starts fully under control of the creating entity. It is obvious that a creator(s) are centralizing factor at the start and they have to willingly release that control by way of protocol and choice. What becomes unclear to everyone in projects that span over many years or decades is where that cut of is or should be. I believe the answer is “once the network is completed”

I know this is hard to hear for many, especially since ADA and staking have been decentralized. But Cardano network is not just ADA. It is not possible to decentralize something that doesn’t fully exist yet.

What I find that confuses many people is that decentralization of 3rd generation of crypto (such as Cardano) takes place in multiple places. Control of token, control of network access and soon access to governance protocol all have very distinct criteria of decentralization. What could be considered 100% decentralized in 1st generation of cryptos that are just based on a token may not be sufficient for 3rd generation.

Cardano Foundation and IOG/IOHK approach so far seems to be to decentralize and release once each stage is completed. They did that with ADA and staking. If we follow that logic it would mean that we still have two stages before they make good on their promise and make it all decentralized and disperse the keys.

Cardano is one of the first 3rd gen networks to do this. There isn’t much history that we can learn from, so we got to learn as we go.

Also, considering that it will take at least 2 to 3 more years (and probably more) to get to 100% we should be honest with everyone and tell them that it is still work in progress.

Looking at all this I firmly believe that Cardano Foundation MUST delegate its keys for purposes of completion of the road map. Cardano Foundations vote must be automatic when it comes to finalizing creation of Cardano. Anything else that hiders completion (except for threats to the network) should be deferred. Any attempt by foundation to prevent, deter or change the road map from progressing as promised should be seen as an attack (excluding any legitimate concerns or existential threats).

Lets focus on getting to 100% road map completion first before we attempt to figure out how that 100% will work.

I would not be part of Cardano community if I though that it was adverse to open discussion and error enlightenment. If any of you out there feel scared to bring up a topic for a fear of being used by “competition” against Cardano, then you probably don’t have much faith in Cardano community or Cardano network.

This! :point_up: I do find it hard at times to dig out information. I do believe that discussions like these would be way easier on everyone if there was some kind of chronological log of implemented (or rejected) decisions with involved entities attached. Prioritize, communicate and hold each other accountable. Lets make use of that inclusive accountability that Cardano is know for. :+1:

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Thanks alot for your post here! :heart:

Haha thanks :smiley:

Yeah im aware of that fact and this isnt the issue here

Im not asking for that here. But i would expect the foundation to take some responsibility and do some sort of controlling in this process.

Also not really asking that the community should be invovled in that process right now. But i dont like the fact that there is so much power at one single entity and we have absolutly no clue which persons are allowed to sign with those keys.

Yes but dont you think it would be a good idea to still be transparent in such questions?

Sure but why was the project set up with these 7 keys so that each stakeholder has some say? these basic principles were suddenly abandoned and no one in the community knows why.

Cant really agree here with you. Whats exactly “decentralized” if IOG has full control? And please lets also not forget about Emurgo. By delegating the keys from the CF to IOG, Emurgo is becoming completly irelevant in this process. Do you think thats a good strategy if you should work as a team?

We know if a single entity has to much power, it will use them sooner or later.

I have absolutly no problem with that as i said i dont belive that IOG has bad intentions. But please be transparent and explain why you are doing stuff like that.

I dont agree on that point either. The CF should be a control body and should point out points that do not correspond to what was promised.

You would be shocked what i heared in the last few days when i prepared this text. :slight_smile:

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@Zyroxa Thanks for bringing this up :+1: More transparency is desirable.

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… At this stage, any such [governance] operation can be performed if and only if a quorum of 5 out of 7* genesis members is reached. Genesis members represent here keys that were assigned to the three founding entities: Input Output, Emurgo and the Cardano Foundation. Because the current quorum limit is 5 and because of the current distribution of the genesis key (3 - 2 - 2), it suffices for only 2 out of the 3 funding entities to perform such an operation. …

We propose to modify the current ledger rules and node configuration to, by default, reject any update proposal or MIR transfer unless they have been explicitly referenced in the node configuration. We propose to make this behaviour optional and only enforced on block-producing nodes (so that, downstream applications such as full-node wallets are not affected unless they desire to). …

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I was going to comment on this but Charles just put out a YouTube video basically saying that CF is about to drastically change (or end?) , so all this new info kind of changes this whole argument. Have a look :point_down:

Also as a side note. The future of decentralization is partly in the hands of Dirk. :rofl: Watch if you want to know more!
Make us proud Dirk! :saluting_face: :blue_heart:

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Seems to occur a lot - technical decisions made by a small core team not really explained or communicated to the wider community until somebody kicks up a fuss about something.

Can’t say I’m surprised to hear Cardano Foundation abdicated their key holder responsibility to IOG, sounds like exactly their MO. That is, of course, when IOG aren’t passing the buck to CF.

I believe this is all planned to change in Voltaire (CF goes away, or changes its role?), but perhaps somebody would like to discuss with the community how this is set to change?

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Seems Charles was already planning on something? Coincidence?

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Yeah i saw that video but to me there are still alot of open questions.

Id like to see a open transparent discussion with IOG, CF, Emurgo and also the community about whats planed, why is it planed like that and who has which permissions right now?

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Pretty sure this video is made because of this tweet : https://twitter.com/Padierfind/status/1542496818797461504

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Yes, so many new questions. There are a lot of new mechanisms being mentioned in that video. I’m currently going trough some video interviews with Dirk Hohndel to get a better feel for how these systems were implemented in other projects.

I’m looking forward to more info about this transition. As for open discussion, I still feel that CF should publish a chronological log of decisions made with at least a brief description of how they arrived to those decisions. It would provide much needed clarity.

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Sounds like a good idea. Would be cool if you would post your research/findings here.

Yes i definitly would love to see that but i feel this will not happen.

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It is going to take me a while to get a better understanding of all of this. There are many topics I have questions about. However, I can share some sources that I feel were informative.

Here is a video interview of Dirk Hohndel that discusses open governance in open source projects. Even thou this interview is from 2020 and has nothing to do with crypto, it seems to be exactly the views presented by Charles.

Dirk seems to be aware of pitfalls of open governance, which is very encouraging to have someone like him on board :+1:. He also brings up a very good points about involved governance and user governance. I think that’s where concept of committees that Charles was mention from comes from.

It does seem that the fact we have ADA holders as users may in fact make some of implementation easier, since in open source projects it is hard to have users and their voting power properly defined.

While this video doesn’t do a deep dive it does clarify some concepts I had question about. :smile:

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IOG communications have already improved a lot, but they still don’t adhere to the CIP process in all cases.
Who really needs to step up communication is CF. It’s very hard to grasp for me what they are actually doing, e.g., lobbying (in light of the recent EU decisions regarding cryptoncurrencies) and regarding the open source project.

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For context and information here is the relevant portion of a Catalyst Town Hall of April 20th 2022 Q& A with Kevin Hammond

Community Governance Oversight group - Oversight of Governance Processes - Community Governance Oversight

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Ah, a transcript of the video linked in the original post! Thanks!

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my 2 cents:

Not only did IOG take over the power with the keys, which originally was meant to be split among the 3 groups so a single entity could not destroy Cardano, but they also did not vote to renew their contract for the development of Cardano.

They have lied to us.

We were supposed to vote on their dev contract renewal and they made sure that it auto-passed.
Yay “governance”!

They were supposed to keep the keys spread out to avoid centralizing the power and they took all the keys.
Yay “decentralization”!

What else is next? Do we just lose our voting power altogether?

We are building on a centralized chain sold to us as this decentralized platform. And what can we do about it? Nothing.

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I mean i get what you are talking about but lets be fair here. There are some parts which arent finished and which are mandatory to be able to vote at all.

As far as i know IOG didnt get any extra funds right now and they pay for this time with their own money.

But yeah i mean the question remains, when are we able to vote about their new contract?

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The security of the blockchain seems the reason why IOG could not be transparant about the update decisions. Surely no mal intent, when transition to community governance structure will be in place, transparancy will increase.

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