A follow-up question hits the nail squarely on the head: should foundations play a role in software updates?

Zamfir opined:

[Ethereum Foundation] funds a lot of development and supports a lot of the people who do make code — real governance decisions at the end of the day. But I don’t know whether you interpret that as the foundation [governing].

After adding his view that foundations should be seen as just another actor playing the crypto game, Wood offered a fascinating glimpse into the genesis block of the Ethereum Foundation:

Back in 2014 at the Ethereum Foundation before it was even really formed we had a sort of semi-official pact that as soon as a theorem was in a state where we could code a DAO we would dismantle the Ethereum Foundation and put all its assets in a DAO and have the Ethereum community actually run it. And that never happened.

As the debate clock wound down, Zamfir closed by noting: “that also isn’t part of the charter of the foundation and therefore can’t happen.”

Translation: (a) Law structures what the Ethereum Foundation can and cannot do; (b) Ethereum Foundation funds many core developers who work on the Ethereum consensus protocol (the site of real governance); (c) ergo, Law structures real blockchain governance.

Two simple follow-ups come to mind: (1) why didn’t the Ethereum DAO governance plan happen; and, (2) why can’t it happen?

These questions are the key to unlocking effective blockchain governance models because they serve as direct linkages between the real world and the world of “write your own CryptoLaw.” They are the nexus between legality and legitimacy in on-chain and off-chain settings.

11D. Legitimate Consensus

We promised an attempt to reconcile Wood & Zamfir on legitimacy. Here it is.

Law is the closest body of knowledge that humans have to common knowledge — in Zamfir’s usage of that term. Law fits perfectly into Zamfir’s definition of common knowledge and legitimacy. Furthermore, law satisfies a clear conceptual and operational need area between purely experimental sandbox-governance deliberations and the day-to-day governance realities of large global knowledge production and socio-economic networks.

Legitimacy is admittedly frustrating and confusing. But so is democracy. So is legality. So are concepts like finality, and immutability — and parity, and comity. The list goes on.

But just because these are difficult concepts does not mean they are not useful. Nor does it mean they cannot be formalized.

Here is an example of Gavin Wood introducing the Polkadot network, using none other than international law as a framing device to explain how this innovative multi-chain consensus mechanism would work.

Of all the consensus-building, legal, and legitimacy frameworks out there, international law is arguably the most nebulous.

International law is notoriously difficult to define and formalize, even for international lawyers!

And yet Wood has no problem appealing to international legal forms and arguments to explain the unique value proposition of what appears to be a crypto proto-interoperability standard.

Furthermore, there is nothing unique about international law that differentiates it from legitimacy as an especially crypto-friendly socio-legal framework. See Blockchain Governance 105: International Law. Wood can just as easily analogize to the process of, say, negotiated rulemaking in the field of administrative law, or federalism in the sphere of constitutional law. Similar analogies can be made to many other legal fields, forms, and processes.

And that’s precisely the point of convergence between Wood and Zamfir. Concepts like legitimacy, legality, formality are still under-developed in blockchain governance. But even in their undefined forms, they already structure our political imaginaries and operational governance options far more than we consciously acknowledge.

These concepts lie at the heart of countless efficient and well-functioning governance processes, refined over thousands of years. To make use of these code and knowledge repositories, governance theorists should simply channel their inner CryptoLawyer.

Thesis 11:

Blockchain governance theorists don’t need to reinvent the wheel in order to recombine existing socio-legal clay blocks into efficient blockchain governance forms. But they should be more careful with the clay.

12. Crypto Governance & Crypto Regulation

Wood: My influence as a Facebook user over Facebook is the ability to not use Facebook. That’s all it comes down to. Zamfir: I don’t think people found that very satisfying. I don’t think that GDPR would really even exist if […] Facebook and all these different companies instead decided “look, our users get to govern how we use their data.” […] The fact that you can’t opt out was one of the main drivers behind this regulation.

Thesis 12:

The insights above are self-explanatory. The only thing we can add is context. See Crypto for Regulators.

13. Computer, Computer

At the end of the analysis, we should broaden our aperture to capture some big picture takeaways. The Zero Knowledge 52 podcast is a tasty intellectual dessert in this respect.

Recorded immediately after the Web3 Summit governance panel, it explores many of the same governance themes, except the questions and answers are even more crisp:

The back-and-forth on coordination problems, management of “blockchain commons,” and rough v. unanimous consensus is all there in the podcast for governance wonks.

But in this more intimate fireside chat between governance insiders, it becomes clear that often (not always, but often), these are just euphemisms for talking about who, if anyone, is responsible for fixing bugs in the protocol, and how to insulate the technicians from the moral, social, and legal burdens of making these extremely contentious changes.

The blockchain governor’s dilemma is the desire to build a machine that allows participants to be CryptoPlaintiffs, CryptoDefendants, CryptoJudges, and CryptoBailiffs — while simultaneously avoiding the maximum number of obligations that accompany those complex social roles.

As Zamfir explains in the podcast, one purpose of blockchain governance is to make tech updates, perform debugging, and fulfill occasional crisis response functions. These technical governance issues can be relatively uncontroversial.

But when tech updates have distributive consequences (decisions that will adjust balances, etc.) can governance be reduced to an automated mechanism where everyone must follow one signal? Acknowledging that we need better ways of reaching and gauging rough consensus, Zamfir is clear that computers cannot do this task: “[governance] definitely can’t be a program.”

Wood disagrees:

After a short technical turn to I/O processes and oracles, Wood signals potential convergence. Wood suggests the main disagreements are on technical matters and things like user interface: basically, full on-chain governance is a question of when, not if.

Zamfir restates the question as a hypothetical:

“How much [on-chain governance] is possible with the tech stack even if it is fully fleshed out?”

Throughout the debate, Zamfir’s answers to this question are a mix of pragmatism and caution: we should not rush to automate things just for the sake of automation because this can lead to unexpected bad outcomes. Further, we should be skeptical about any process that claims to fully model complex human governance pathways.

Wood disagrees:

Or does he?

The point is not to compare Apple’s butterfly keyboard with the awesome potential of a hardware-agnostic globally-distributed networked computer. The point is to emphasize that our faith in computers is often … faith … in computers.

If the butterfly keyboard example seems too trivial, here’s another perspective:

Thesis 13:

Onchainization of governance is happening but it should happen as slowly and as incrementally as possible in order to permit careful debugging. For many spheres of governance, onchainization is inadvisable, if not altogether impossible.

14. Code as Check on CryptoRoyalty

After carefully dissecting the Wood-Zamfir governance debates, we hope to have mined enough credibility to ask the following question without blowback: what’s really going on with blockchain governance? Is there a deeper source of contention beyond who governs whom?

Turns out, yes! Everyone in crypto seems to be laboring under the anxiety of influence — the long shadow cast by the other founder of Ethereum, Vitalik Buterin.

Hi guys!

Here is Wood describing how blockchain governance should work, by contrast to how governance currently works in Ethereum —

(1) A decision-making mechanism should lead to (2) binding enactment of the decisions that it makes. Ethereum has a functional connection between the two by virtue of it having a single leader [Vitalik Buterin] that most participants in the ecosystem can rally around.

The embedded critique is that Ethereum governance is a monarchy that works because most of the royal subjects recognize Buterin’s royal prerogative.

But here is why the enlightened monarch model is not sustainable, according to Wood:

[It is] massively unfortunate that governance at this point seems to boil down to one or two key people in the [Ethereum?] ecosystem not wanting to feel unpopular on social media. Social media [and social media gaming] have way too much of a throat grip on the ability, or lack thereof, to make decisions.

One of the effects of Wood’s governance idea is that we can use code to usurp a power-hungry crypto monarch.

Who needs lambos when you’re a CryptoRoyal? Louis XVI, before the hard-fork known as the guillotine. Portrait by Antoine-François Callet.

In an ideal case, of course, usurpation is not necessary. The monarch abdicates, and all power presumably goes to the Crypto Soviets. In this case, the monarch not only willingly relinquishes power, but perhaps even endorses governance code that effectively ends the royal line of succession.

Returning to Wood’s proposal, this would mean code that tries to anticipate and block the emergence of a single leader. If such rules can be coded, they could easily be adapted to block coalitions, castes, oligarchies, and cartels. Yet again, we see pronounced commonalities between Wood’s anti-CryptoRoyalty objectives and Zamfir’s anti-cartel proof-of-stake proposals.

In principle, Wood’s proposal is sound. There is a reason why democratic governance is an emerging norm under customary international law, and why theorists like Zamfir are agitating for inclusionary blockchain politics. The greater the number of participants in governance, the more we can diffuse risk and lower the overall systemic chance of failure.

Thesis 14:

The key question is not whether usurpation/constitutionalization by code is desirable: the key question is whether it is feasible.

15. God Save the Chain!

Wood & Zamfir explore the feasibility of on-chain governance from nuanced technical, game-theoretical, and socio-economic perspectives. We propose two additional perspectives: historical and legal.

To do this, let us return to the United Kingdom — the place where “almost a third of Brits (32%) would welcome a robot CEO” — and, perhaps, on-chain governance.

Since the Battle of Hastings in 1066, the “well-governed” shores of Albion have seen waves of hard- and soft-norm formation that have variously expanded and restricted royal power.

The result is a contemporary governance regime where “the governed” (which, in 2018 still includes a sprawling global Commonwealth) must pay and do pay obeisance to a Queen! — whose formal and informal duties include, inter alia, appointing the Prime Minister, serving as Supreme Governor of the Church of England, and serving as commander-in-chief of the British Armed Forces.

The Commonwealth realms, governed by the Queen Elizabeth II and lots of fuzzy customs, conventions, precedents, norms, and laws.

Many people view the role of the Queen (or, say, Vitalik) as “largely symbolic.” Royalists see these views as largely irrelevant. Even Wikipedia consensus teaches us that it’s complicated:

Though the ultimate formal executive authority over the government of the United Kingdom is still by and through the monarch’s royal prerogative, these powers may only be used according to laws enacted in Parliament and, in practice, within the constraints of convention and precedent.

The “constraints of convention,” precedent, and Law cut both ways. They restrict certain actors’ freedom of action; but they also reify and affirm those same actors’ freedom of action, just in different ways— which resets the process of contestation and new norm-formation.

The broader point is that no matter how much form and process we throw at the governance problem, in the end, it is not just formal process that defines the exercise and limits of power.

Thesis 15:

Governance is not chess because humans are not pawns.