Recently, at the San Fransisco Blockchain Week [SFBW], Vitalik Buterin, the Co-Founder of Ethereum, spoke about the developments of the Ethereum core. During the discussion, he also spoke about on-chain governance mechanisms and presented his views on the matter.
Vitalik Buterin began by elucidating his contribution to the development of the Ethereum core. While doing so he also stated that he played a major role in the development of the Plasma Cash technology.
Plasma Cash was proposed as an enhancement for improving the scalability and security limitations on the Ethereum blockchain. Plasma Cash is as an improved version of the Plasma technology, which was first proposed in August last year, by Vitalik Buterin and Joseph Poon. Plasma Cash’s technology, with the help of smart contracts, allows the Ethereum blockchain to represent decentralized economies.
Speaking about the developments on the Ethereum core side, Buterin stated:
“We really are at the point where all of the kind of big fundamental problems are basically solved, and it’s more a whole spattering of little things, about how to make it more efficient.”
Buterin went on to state that they were concentrating on smaller problems like transitions between validator sets that will contribute to making the Casper beacon chain more efficient.
Next, Buterin spoke about mechanisms that people generally get excited about, but are worrisome to him. He said on-chain governance is one such “obvious” mechanism.
According to the Co-Founder, the reason behind people’s excitement is the idea of blockchains being fully automated, and the ability of blockchains to perform upgrades without a complicated political process. However, he stated that on the downside, people think of governance mechanisms with much lesser crypto economic rigor than how they think of consensus algorithms. He went on to say:
“Most of these are kind of …on chain voting, whatever mechanisms are just horribly vulnerable to collusion attacks, horribly vulnerable to bribe attacks.”
Vitalik continued to elaborate on the matter. He stated that such governance tends to have plutocratic incentives wherein if one has 2% of all the money, one can vote on a slot and can gain access to hiring plutocratic special interest rates. He also stated that if one has 4% of the total, they will get twice the plutocratic interest rate on double the money.
Buterin also highlighted the fact that there have been some high-profile cases of coercion uncovered lately, in the blockchain space. He further added:
“So you know no it’s definitely not true that large actors in the cryptocurrency space are willing to kind of pass up opportunities to earn millions of dollars just for the sake of being nice for the good of the cryptocurrency ecosystem.”
In Buterin’s opinion, the blockchain space lacks a good, sensible mechanism and there exists a need for blockchains to represent the interest of users and not just the interest of concentrated groups like token voters and miners.
He concluded by stating that in most of the cases the reality is far lower than what people are expecting.
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