Meritocratic Governance

When designing Xank, we researched compatible governance models. We were impressed by the Idea Meritocracy System that underpins the growth and success of the Bridgewater hedge fund which started in Ray Dalio’s garage and turned into one of the largest hedge funds in the world. You can read more on this in Ray Dalio’s essay.

The key points from this essay are where Ray takes a step back from making all the decisions in the firm and instead created a system where all employees could make proposals according to their expertise. As counterintuitive as it may seem, employees were encouraged to give honest opinions as opposed to saying what they thought they should be saying — a practice that is predominant in both corporate and general work culture. Expressing honest ideas in the open, in a sandbox of ideas if you like, is a practice that encourages creative thinking to be expressed and for ideas to be debated and defended. The best ideas rise to the top. If disputes could not be resolved, protocols were put in place to keep the discussion progressing to a better solution than not doing anything at all.

In general, and with particular reference to cryptocurrencies, the concept of a meritocracy is where the best ideas and proposals rise to the top and the most capable are incentivized to implement these ideas and proposals and see them through. This inevitably benefits the whole network. In a decentralized network of self-governed individuals, this translates to the most capable being incentivized to consider and to implement proposals with the end result being that the network becomes more valuable than the sum of its parts. A network where you are incentivized to participate as you prefer a better outcome for yourself, but also because you stand to benefit from the brightest and most capable within the network itself.

The design of the network must be such that the act of participating in it enhances your self-sovereignty, and not joining it does not leave you in a neutral position, it actually leaves you worse off for not having joined. As discussed in our previous post, Breaking Down Xank’s Proof-of-Stake Consensus Algorithm, a mix of staking incentives can be designed to attract this kind of participation.

With cryptocurrencies, stablecoins, and as with all voluntary networks or associations, governance is about consent. Without it, you cannot achieve consensus.

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If you want to know more about Xank stablecoin, please read my introductory post — Inherent Stablecoin Challenges That Xank Is Set To Overcome.

If you want to see how Xank compares with other stablecoins, please read my other post — What are the requirements for Cryptocurrency mass adoption? — Infographic.