Native assets and stakepool's ethic

With Shelley on the way and native assets/Plutus not far behind, I have been think at the position that stakepool operators might be in once native assets land.

As a stakepool operator, I would like to be able to decide what transactions would be integrated in the blocks produced by my node, and which one I would be relaying to the network.

As gatekeeper of the system, and as representative of the people which are delegating their stake to my pool, I think that it is only natural that I can represent them not only financially (maximising their reward by having a good infrastructure, …), but as well ethically.

At some point, given the decentralized and permissionless nature of Cardano, there might be a time where some tokens, representing assets not in line with some people’s ethic (incentivizing prostitution, security tokens of entities leveraging child labour, practising modern slavery or destroying the environment to name a few) and which I hope a significant part of the ecosystem wouldn’t feel comfortable helping to grow business.

Decentralization doesn’t mean that it has to be the anarchy, and having native tokens with their own dedicated addresses should make it relatively easy to identify specific tokens.

I understand that preventing validation of transactions associated with one token only for a subset of stakepools would be impossible as it would create forks on the blockchain (one set of operator accepting those transactions, the others refusing it), and in the meanwhile of having a governance system which would enable us to ban tokens at the end of a vote, I would have liked to have your thoughts on having a configuration for each stake pool, which would enable the operator to prevent the transactions for specific tokens to land in the mempool and be minted by the pool.

The idea behind it is: if a sufficient amount of pools put a specific token on their blocklist, it would reduce greatly the transaction throughput of a given token, ultimately making it unusable at large scale. Moreover, the number of blocks integrating those transactions would hopefully be very low as the stake delegated to pool agreeing to integrate those transactions would also be very low. Ultimately, that would be reflected in the explorer, where the pool operator would be able to prove its ethic, and would increase the trust with his delegates.

As well, the fact of helping facilitating transactions for illicit businesses in some countries could maybe be seen as illegal, and holding these tokens could ultimately endanger the stake holder? The same way that for example money laundering exist in the current financial system but banks are supposed to help prevent it, these transactions would still exist on the blockchain but the block producers would be accountable to facilitating these transactions.

This kind of idea would be easy I think to integrate in Cardano, and given that the goal is the be able to govern all together the ledger, I think it is important that we could build a code of ethic around it.

Ultimately, participating in this project will show what kind of community we want to be, and what kind of people we would not welcome in our ecosystem. We have to show that we can autoregulate our own ecosystem without having a third party imposing a set of rules on us, that we would not necessary agree with.

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Are you for internet neutrality ? If not, your position is legitimate.

Greetings Matthieu,

I am curious, how and why should someone like myself trust that you specifically are ethical? And how is it that your perception of what is unethical should be universally accepted as valid?

Why, at this point in time of the Cardano community’s development, would anyone want to start qualifying some ADA as ‘good’ and some ADA as ‘bad’? If you really want to get after the evil-doers on the planet is it possible that you would agree to work with some government agency to track deposits and withdrawals on the blockchain?

Have you considered that perhaps your ideas here are outside of the stakepool operator’s job description?

I may be new to the Cardano community but some ideas are not new.

I mean nothing personal by my response Matthieu, I would simply suggest some study into past expressions of these ideas.

Peace

Thank you for your answers.

I completely understand what you both mean, and my intend with this post is more as a reflection on what might happen in the future if we have a system which can actually compete with current centralised systems.

If stakepools are registered as legal entities in some countries, they might at some point be seen by regulators in the same way as banks, processing transactions, and having the responsibility to apply the same regulations on transactions they would broadcast to the rest of the network as a banks are currently doing.

A stakepool could decide to change jurisdiction, but there will be technical constraints at some point which would make this difficult I imagine (requiring good quality hardware and network connections hard to get outside of datacenters) once a certain amount of transactions flow through the system.

As well with stake holders, if they would receive bundles of tokens as rewards, some might be seen as illegal by regulators - wouldn’t they been seen as breaking regulations of their country in which they reside for having a share of it, while they are not involved with it at all? For things like Ethereum, this is kind of masked by the fact that the reward for running the contracts is Ether, while here that would be explicit to the stake holder.

At the end, I completely agree to the fact that ethic is something completely subjective, and as such, it should not interfere with the way the system should run.

What is ‘good’ or ‘bad’ should be left to people whose job it is to do (law enforcements, law makers, …), and shouldn’t the decision of a stakepool operator (and have already quite a lot to do).

Pease

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Hey @Matthieu!

You are talking about avoidance here, which is an honorable measure.

So in order to have avoidance we would somehow have to ensure that those “unethical” transactions have somewhere to go. Otherwise we are penalizing those tokens, while incentivizing the creation of “Evil Pools” that would naturally collect on the opportunity to charge extra fees to enable transactions for tokens that are marginalized by the “White Pools”. Ugly stuff.

As you said, as an ecosystem, we could ban or penalize tokens democratically and maintain control. Giving pools such a drastic power could lead to vigilantism and separatism imho.

Notwithstanding, I really like your idea of putting power in Pool Ops’ hands, to represent those delegating to them better, but these should always be optional imo. Perhaps soft measures could be employed.

I’ll try some examples, but shooting in the dark here -

  1. Pools that don’t accept stake from accounts that traffic in “Evil Tokens”, if that’s technically possible.

  2. “Ethical” pools giving low priority to “Evil Token” transactions so users need to pay higher fees to get included in a block (Probably a bad idea, and doesn’t fit with Cardano’s architecture I think).

  3. Creating standardization organizations that will create standards which pool operators can adhere to, and that are widely recognized. Not sure what would be the driver here.

The bottom line though, imo is that pool operators shouldn’t have any exceptional mechanisms to influence the network behavior. Their responsibility is too “low level” not to be totally “blind”.
Sure, the internet can serve as a platform for the worst crimes, but that is not something I would consider addressing on the “Network Layer”, it’s more important that it is kept as free as possible imho.