While decentralization is the ultimate goal for blockchain projects, in the current state of blockchain affairs it’s more of an end goal than a starting point. There are still a lot of issues that need to be ironed out in order for a governance system to work properly. When time is of the essence a system like arbitration doesn’t work, because when you wait too long the damage has already been done. The ultimate resolution of the governance system failures might take a lot of time and effort. Security should always be more important than governance, because it is the base of a good blockchain project and governance is a nice addition. The three different actors in the EOS community, being the 21 block producers, arbitrators and token holders, should all agree on a satisfiable solution to the current governance issues in order to move forward and show the world what they are building/supporting. Source

EOS is always termed as the governed block-chain which has its own constitution and an arbitration forum ECAF to enforce it. The idea of including an arbitration forum on the base layer was to establish trust between the individuals and businesses. The very first set of rulings by ECAF, raised many questions on forums power and subjective arbitration. Looking at the missing boundaries, Block One called for an end to all arbitration orders other than to render non-binding opinions on the intent of the code.

The proposal intention was to shift the governance structure from the base layer to dApplication layer with clearly defined objectives. Also, it was proposed that block producers act as jury only in case of freezing or replacing a broken contract.

To enforce the dApplication layer disputes outside the scope of “intent of code is law”, we at EOSMetal have developed a Proof of Concept of Bond based arbitration with defined boundaries (objective) and penalties. The bond could help make claimable promises to establish trust and gain visibility.

Daniel Larimer envisioned base layer arbitration to be very different than what it is now. ECAF was just liable to give opinions not rulings, which may or may not be followed by Block Producers. The idea was to give no one the supreme powers.

To place proper check and balances on the misuse of the power by Arbitration forums, the proceedings were ought to transparent, on-chain and open for judgment by the community. As it is unwise to share the details of the disputes looking at current scenarios, a layer of opaqueness adds to the actions of arbitrators which weakens checks and are subjected to get corrupt over time.

Our arguments against Base layer arbitration-

Enforceability — Opinions rendered by Arbitrator are needed to analyze by Block producer. The judgments by Block Producers are mostly dependent on getting votes i.e they could be swayed in favor of large voters. If Base layer forums are binding and are enforceable, we feel that’s too much power in the hands of forums and check and balances become difficult. If the protocol layer has many arbitration forums, then BPs may find it difficult to enforce the awards i.e we may not want to freeze any accounts just because an arbitrator says so. We believe enforcement of any subjective claims should be enforced by third-party arbitrators and should not have any involvement of Block Producers unless disputes are related to fixing the code. Scalability — with many disputes arising, the community/ the Block Producers may find it difficult to have proper check and balances which might lead to corruption or abuse of power in long-term. Absence of well-defined Jurisdiction.

Bonds and dApp layer governance.

Unlike base layer governance which tends to handle all the disputes and demands regular checks by the community, the dApplication layer governance works in parallel limiting the responsibilities of BPs to enforce.

The concept of Bond based governance and arbitration rulings limited to bonds is the brainchild of Daniel Larimer himself.

Importance of Promises in the Business

Commitment, given by one party(the promisor) to another (the promisee) to carry out or refrain from carrying a specified act or acts. Promises, however, are legally binding only when they are made in the contract (voluntary, deliberate, and legally binding agreement between two or more parties).

What are Bonds?

The bonds are the collateral raised against a set of promises (clauses defined) bundled with the Ricardian contract which could be claimed in case of any disputes and are legally binding. The arbitrator powers are just limited to bonds.

Proof of Concept: Tungsten

We at EOSMetal have developed a proof-of-concept: Tungsten based on bonds which could ease the shift of arbitration from Base layer to dApplication layer

Using Tungsten any entity or individual could raise a bond with a set of claimable clauses (promises with defined penalties). A bond issuer could also choose any arbitration forums to handle the disputes (opt-in) and select the time frame of the bond.

Also, in case of any disputes, an individual could claim against the bond. He would need to specify the bond hash and claim value (penalty). A claimant will have to fill 10% of the claim amount as a bond which goes to the defendant in case the claimant loses the award.

An arbitrator could put the rulings on-chain using the Tungsten and if the ruling is in favor of the claimant, the smart contract transfers the funds to claimant.

The bond acts like escrow and could help with establishing trust within the community members. The contract shifts the dispute resolution away from any influence of Block Producers or any centralized entity. Also, it makes the awards by Arbitrator self-enforceable without the need of intervention from Block Producers.

The Road Ahead!

Tungsten is a small step towards the bigger goal of making EOS network dApplications trusted and secure for mainstream adoption with the flexibility of opting own set of rules.

Register Arbitrator.

We need to add a functionality for any individual to register as an arbitrator with an option of raising a bond himself.

This way any arbitrator who is willing to resolve disputes on EOS network could register and establish trust. We feel as the dApplications starts coming up on the network the need for individual arbitrators handling small disputes will increase.

Arbitration Forums

An arbitration forum or association is an organization that administers arbitration proceedings. These organizations are distinctly different from arbitrators because the forum does not actually arbitrate or write arbitral awards (essentially the rulings that are the result of arbitration). Their job is to maintain a set of rules for dispute resolution (RDR), maintain a database of qualified arbitrators to match-make with the needs of the claimants, assist in the administrative tasks from claim filing to close, and act as a hub of communication between the arbitrator and the claimants. Source

Along with allowing arbitrators to register, we are also working on the contract to help forums register themselves. EOS NewYork is working towards the {regarbitrator} and {regfourm} contracts, if possible, we could use the same contracts and allow the registered arbitrators or forums raise bonds themselves.

Public Forums

Forums are important to have on-chain evidence by the claimant (if possible) and awards by Arbitrators. Forums could help with two majors functions-

Filtering arbitrators based on awards and resolved disputes documents.

2. Filtering claims, which could help with analysing the health of arbitration ecology and help with updating clauses for bonds.

Ricardian Contract Auditors/Smart Contract Auditors

If Bonds are widely used the majority of dApplication owners will look for security auditing of contracts before deploying them. Ricardian contract and Smart Contract will be needed to be then reviewed and rated by the Auditors.

The rating and reviews by trusted auditors will help with standardizing the bond dApplication accordingly.

It creates an opportunity for entrepreneurs to start auditing and rating firms for bonds.

If you are looking for starting an auditing firm, get in touch with us!

Certification

A criticism of opt-in kind of agreement argues that such an agreement, which is drafted unilaterally by the individual/ dApplication/entity while giving clear preference to the drafting party and includes uniform terms in an adhesion contract that are not subject to changes or negotiations, does not express, in most cases, the genuine consent of the signer. The click of consent (Ricardian contract — I agree) is often carried out without the contract being read in advance by the user. The bottom line is that the concern is that such consumer consent is likely to give rise to illusory consent or settlement.

To safeguard users to give illusory consent to the business owner we feel certificates (licenses) based on auditing of RC and Smart-Contract could help to distinguish the good bond dApplications from self-preference bonds dApplication.

Block Producers are very well known within the community and steward the community towards using the right set of tools. The idea behind introducing certificates/licenses is to help audited bonds and smart contracts with high visibility and more trust within community members using the tools endorsed by Block Producers.

Wallets / Browsers

We think moderation is a great tool used on the internet which helps to filter the websites. The Browsers/ wallets developed to filter secure dApplications based on bonds and certifications could make users less vulnerable to thefts and scams with no bonds and security.

In a world where protocol-level dispute resolution is limited to fixing bugs in the code, how does one protect against fraud and theft of keys? The answer is to opt-in to a banking Ricardian contract which controls the tokens on behalf of their owners. Transfers within the smart contract are subject to dispute resolution where the contract-appointed arbitrators have the power to reverse transactions and freeze tokens. Withdraws from the banking smart contract is subject to a 3-day delay after which they cannot be reversed.

Source

Block Producers and Bonds!

Instead of having subjective disputes around the {regproducer} contract, we propose shifting the clauses to bonds and allow Block Producers to make promises. The community could vote for the Block Producers analyzing the claimable clauses driven by the free-market approach. In this way, the health of the network could be analyzed better and we could drive community towards better governance, with corruption removed from all the layers.

EOSMetal will be the first user of Tungsten and will deploy its own bonds which could be claimed by any user voting us. We hope many other Block Producers will join our initiative and raise similar bonds. The set of promises made by Block Producers governed by free market forces will provide the flexibility for stakeholders in terms of governance.

Advisors

We are glad to have Cryptolions, EOSTitan and EOShenzhen as our advisers for this project.

Conclusion

The EOS community is still experimenting and looking at various options to create a robust governance structure which attracts the mainstream businesses or dApplication and promises individuals a secure infrastructure.

With many voices, opinions and missing implementation of dApp base layer arbitration the debate has been back and forth with no outcomes. With Tungsten, we hope to fill the void with the help of claimable collaterals.

We feel if the community reaches a consensus of taking right steps towards creating the secure infrastructure which filters the malicious contracts and provides visibility to trusted dApplication, we would just need lean governance on base layer.

Resources

We invite you to join EOSMetal and discuss the implementation of bond based governance on telegram here: https://t.me/eosmetal

To view our initial implementation please visit Github here: https://github.com/EOSMetal/tungsten

EOSMetal is a standby producer on EOS Network which uses bare metal servers /hybrid technology. Our only policy is of transparency, we are self funded and are inclined towards Lean Governance. Please consider us for vote: eosmetaliobp.