Blockchain technology has the potential to be a great equalizer. Decentralization empowers people over gatekeepers and allows for freely distributed and accessible information. While computers and algorithms play a vital role in encrypting, writing, and storing blocks, people are still responsible for the code and integrity of the system.

Decisions about standards, protocols, features and upgrades (network governance) must be made by people that support the best interests of the blockchain network and it’s participants. These governance decisions should also be made independently — by trusted, accountable individuals. In the POA network, governance decisions are made on-chain by ethical, already trusted, validators on the network.

Proof of Authority Governance

POA Network’s proof of authority model creates a public system of ethical and accountable governance. Network validators are required to obtain a US notary license before they are considered for the core network. Each validator must use the network’s “proof of identity” decentralized applications (DApps) to prove their identity and notary status.

US notaries are duty-bound to provide impartial and trusted witness to the signing of official documents. They confirm the legality and integrity of contracts between parties. In the POA network, these individuals stake their identity in order to secure the network.

Each validator’s information (name, address, notary license) is transparent and publically available. This creates additional incentive for them to work in the best interests of the network.

Validators: Creating a Trusted Network

The first POA validators were selected at network inception. These trusted individuals met the following validator qualifications:

United States resident over 18

Notary public with a valid, verifiable license

Participation in the test network

Technical ability to run a node

Forum participation and public biography

These individuals are not affiliated with one another, are involved in diverse professions, and live in different parts of the United States. This helps to ensure impartiality in decision making. During the initial network deployment, The Master of Ceremonies distributed keys to these trusted individuals, allowing them to participate in governance of the network.

Now that the network is established, validators nominate and vote in additional validators through an on-chain governance process. The length of time it takes to become a validator depends on numerous factors. Validator candidate Alexander Beal’s forum post shows the number of days each candidate needed to move from network introduction, to Sokol test network, and finally to Main network validator status.

What is On-Chain Governance?

On-chain governance means that network voting proposals and decisions are processed on the blockchain and recorded to the chain ledger. In this system, ballot creation and voting must follow a well defined, consistent process.

In the POA network, validators propose ballots and vote on these ballots through the governance DApp. Validators practice self governance, and a majority decision is required for any ballot to pass. Currently there are 17 validators on the network (with plans for 25), meaning a ballot currently requires 9 votes to pass if all 17 validators vote. Once a decision is made, it is written to the blockchain and becomes an official mandate of the network.

Validators may propose ballots on any number of items impacting the network, including:

Adding new validators

Removing validators, i.e. for compromising security of network, malicious behavior, non-participation in governance

Updating/swapping of one of more validator keys

Changing the approve ballot threshold

Changing the consensus proxy contract

Why On-chain Governance Works

On-chain governance provides several advantages to a blockchain network.

Decentralized: Individuals participating in this model are dispersed throughout the country. Each validator is responsible for discussing proposal and asking questions, researching proposed changes, and voting according to well informed, independent opinion. The chance of collusion in this model is less than in an off-chain system, where individuals often form support and opposition groups.

Consistent: Ballots and votes are all conducted through an easy-to use DApp interface. A time is selected for expiration and each member is informed when a ballot is open and when it will expire. This makes the process easy to follow and the results are clearly written to the chain.

Efficient: The voting period is time bound, meaning that proposals are agreed upon quickly. This prevents issues such as hard forks based on a lack of decision making. If a majority of the validators vote for a fork, it is enacted and legally bound to the chain.

Transparent: Voting records are clearly visible to all members of the network. Validators can see the participation by other validators on voting processes. If a validator is not participating in governance, a proposal to remove them may be initiated. This provides incentive to participate and prevents low voter turnout, a potential risk of other on-chain governance models.

Proof of Authority or Proof of Stake?

Many new blockchain projects are enacting on-chain governance. A majority of these follow a proof of stake model, where individuals in the network are given more voting power based on the amount of tokens (stake) they hold in the network. Some examples include:

EOS: Follows the dPOS (delegated Proof of Stake) model. Validators are chosen by token holders (more tokens = more voting power to choose validators).

Cosmos: On-chain governance with the POS (Proof of Stake) model. With the Cosmos Hub, the voting power is determined by the amount of staking tokens bonded as collateral.

Tomochain: On-chain governance with the POS (Proof of Stake) model. Coin-holders vote for masternodes by sending $TOMO to the smart contract.

The biggest differentiator between the POA model and the models above lies in the amount of power certain individuals may hold to influence the system based on the amount of tokens they own.

In the POS and dPOS models, individuals with more tokens have more voting power. This is a familiar system (plutocracy), and one the blockchain is actively trying to avoid through decentralization. With dPos, there is an additional opportunity for bribery, as explained by Vitalik Buterin in this article: https://vitalik.ca/general/2018/03/28/plutocracy.html

Stake-weighted on-chain governance is seeing an increased adoption due to factors such as improved transparency, faster decision making, and process consistency. Price volatility may be reduced as those with network stake have incentives to keep tokens in the network in order to maintain power.

With the POA model, the same benefits of transparency, speed and consistency apply. In addition, all POA validators have an equal say and an equal responsibility to support the network and maintain a secure environment.

Maintaining Network Integrity

Ultimately, the blockchain is a system designed to help people achieve equality, security and trust in their transactions. In order to maintain this integrity, it is vital the governance process also maintain integrity. At POA network, we have designed a system based on human trust and a commitment to preserve the ideals of a decentralized blockchain.

We believe that all humans are equal regardless of where we live, what organizations we belong to, or how much crypto we hold in a network. POA’s governance model is based on this basic principle of equality and desire to empower one another.

We are planning on releasing more governance related news soon, so be on the lookout for some exciting updates!

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