My opinion on the viability of tokenized blockchain ecosystems has evolved since I first published this. In the spirit of personal advancement, I generally do not stand by any opinion I had or anything I wrote more than 3 years ago.
EOS is a beautiful mess right now. The conversations swirling around Constitutional reform and what “should” and “should not” be included are a testimony of the breadth and depth of thinking that makes EOS infinitely more anti-fragile (to borrow a term from Taleb) than its nay-sayers claim.
Like all things political, though, there is no single solution that can satisfy the vision of all users. And that’s just it, there’s no SINGLE solution that can satisfy everyone. But this is the age of blockchain. Why in the world are we married to the idea of just one solution? We all believe monopolies are bad, so why are we hell-bent on building a solution that monopolizes the EOS legal framework?
Polycentric law is a framework in which multiple legal systems (i.e. constitutions/user agreements) exist in parallel and compete within a given jurisdiction. While the name is relatively new, the concept is as old as Rome, where Roman citizens were governed by one set of rules, but Rome’s non-Roman subjects were permitted to retain their native legal constructs.
I am a member of a fraternity. I am a member of a church. I am an employee. I am a son. I am a husband. I am a father. Each of these constructs have different sets of rules of behavior, some explicit, others implicit, that I use to govern my actions while interacting with other members of that group. The range of acceptable behavior expands and contracts based on the parties with whom I am interacting and the rules they too have voluntarily chosen to accept.
When I am with my fraternity brothers, our rules define my behavior. When I am with my fellow church-goers, a different set of rules suddenly occupy supremacy.
The rule-sets we follow change as we move from one human interaction to another.
The fact that humans are so good at seamlessly switching from one rule-set to another informs how we should design our blockchain governance.
Competing Governing Paradigms in EOS
As I mentioned, the discussions about Constitutions/User Agreements that are currently dominating the EOS landscape are going to continue. There are currently 3–4 proposed versions of a Constitution, each vying for support. Everyone is convinced that some form of direct democracy is what is needed to solve EOS’ problems.
Democracy, majority rule, even super majority rule, has not proven to be all that good at protecting the little guy, and in a DPOS framework, there are a LOT of little guys.
It isn’t enough to place several governing documents in a run-off referendum. It will not solve divisions, it cannot facilitate interaction and bring unity, it will only serve to alienate projects and persons who don’t agree with the winning governance structure from the mainnet. That is a high price and a grave risk to place in the hands of the mob.
Referenda via direct democracy isn’t competition. Not in its truest sense. It is coordinated collusion.
A competitive environment would be one where various Constitutions/User Agreements could exist simultaneously on one chain. Where they could be adopted, experimented with, and rejected by mainnet users, DAPPs, and Block Producers.
Rights Tokens and Users
For a polycentric legal framework to work on a single blockchain we need a way for individual users to opt-in and opt-out of legal frameworks/rule-sets. We also need a way for these same users to easily recognize which legal frameworks/rule-sets other users have personally ratified.
Enter the Rights Tokens. Every Constitution or User Agreement should be a smart contract accompanied by a human readable Ricardian Contract (an elegant standard pioneered by Ian Grigg) that includes full text of the Constitution/User Agreement. This smart contract that accompanies the Constitution/User Agreement, upon being signed by a given account creates and issues a single, fungible, non-transferable, non-divisible, burnable token to the account. Upon receiving the Rights Token indicating acceptance of a given Constitution/User Agreement, any user or DAPP that queries the account can quickly verify: (a) that the user has personally ratified the given Constitution/User Agreement, and (b) when the user personally ratified it. Likewise, the contract governing any given Constitution should empower a user to withdraw consent and thereby burn/remove/delete the Rights Token associated with the Constitution in question.
A person will be able to opt-in to as many governing frameworks as they choose. Accounts may accumulate dozens or hundreds of Rights Tokens, indicating willingness to submit to the rules of various Constitutions.
Rights Tokens and DAPPS
DAPPS, too, have accounts. On a mainnet with Rights Tokens, DAPPS would select the governing documents they are willing to submit themselves to, as appropriate to their business model. As dozens of Constitutions emerge, the legal frameworks and the rights recognized therein will become more and more diverse, and more specialized. Perhaps one will adopt the rules of the Uniform Commercial Code. Perhaps another will focus on Eurozone Compliance. Perhaps another will establish Sharia based governance.
Like individual accounts, DAPP accounts will also opt-in to as many governing documents as they choose.
Rights Tokens and Block Producers Block Producers aren’t exempt from the process either. They can opt-in and opt-out of any Constitution/User Agreement at any time. In-so-doing, they signal to voters what orders and processes they are willing to follow and obey. Like individual accounts and Dapps, Block Producers will also opt-in to as many governing documents as they choose.
The magic happens when, for the first time in human history, without strong ID, and without foreknowledge of a person’s allegiances, clan membership, tribe, or geographic jurisdiction, we can discern which rule-sets govern interactions between people.
People freely interacting can immediately tell what rules are in play. Am I sending a large sum of EOS to pay for an item? You better believe that for that interaction, I want a legal framework that includes arbitration and is recognized by at least 15 of the BPs. A quick glance to confirm which Rights Token the other party possesses. I take note of tokens we both hold. I consider which of those the current BPS have adopted, and I can choose to continue with the transaction or not.
Perhaps I am just signing a transaction to send a message to another party, and in that circumstance alone I am OK with the wilds of anarchy, no Rights Token necessary.
How to Move Forward
Ignoring, for a moment the technical demands of designing a smart contract that creates a single, fungible, non-transferable, non-divisible, burnable token on-demand, the greatest strength of this approach, given the current climate of EOS, is that no referendum, no vote, no binding changes need to occur.
Once the standard is built and the tech is stable, anyone, perhaps one of the entities who have proposed one of the current alternative constitutions, can simply launch their contract and signal for users, Dapps, and Block Producers to voluntary submit themselves to the given rule set.
No more divisive, us-vs-them, direct democracy. This is the market in action. This facilitates, rather than restricts, human interaction. Public blockchains, with their infinite use-case promise, NEED polycentric law and Rights Tokens can make that happen.