Key Problems in Governance and Coordination

CTA: In these threads we attempt to inventory key areas of exploration that may exist in a particular discipline. These posts are living documents and it is our hope that the community will contribute to the list.

How do you define good governance outcomes?

The procedures used to 1) gather input from system participants, 2) achieve consensus for system-level decisions, and then 3) implement these decisions are what comprise a governance framework. Many different projects and protocols have implemented and are implementing governance mechanisms in their smart contract designs. As such, there are frequent debates about how well these mechanisms are performing, how they may be improved, and whether they are achieving their goals or not. At the end of the day, the question that is being discussed (though often implicitly) is how to define “good” governance.

This is particularly important and relevant because you cannot define a “better” governance and coordination mechanism without first defining what good governance means. Since this is a normative statement, we must consider a normative goal, in other words: a value system. This is an area of research and discussion that the community can continue to engage with as multiple sub-problems or component questions must be resolved to make progress on the broader problem.

For example, what is the most optimal method of considering the value of system-level decision-making: from the perspective of an external actor interacting with the system, an internal system participant, or even from the perspective of the system itself? Is there a correlation between certain types of governance outcomes and overall longevity, growth rate, or financial success of that system. Are there qualifying conditions that should be applied to these outcomes, such as speed of resolution or degree of contention involved? Additionally, there is work yet to be done in defining the best practice methods or tools to measure these outcomes or to measure the inherent costs incurred by the system and its actors in the process.

What does a good voting process look like?

An important component of most governance mechanisms in smart contract applications is voting. In order for the system to make good decisions and to achieve its defined goals, it requires participation from internal actors to reach consensus on proposals and in turn the system must have a defined methodology for processing these votes to achieve consensus for making an ultimate decision. Most solutions tackle this via voting structures, though this is itself an opportunity for researchers to further define the domain space. There is currently a gap in what we understand about the domain space of governance in that there are not well-defined best practices for collecting voter input and achieving consensus for system-level decision making, particularly for off-chain social coordination.

There are a number of important problems and questions for researchers to tackle in the course of answering this higher-level question. For example, how to ensure accurate voter representation and how to defend against malicious inaccuracies or duplicate votes? What is the optimal structure for collecting and processing votes and to what degree should this occur on-chain versus off-chain? How do you measure the costs of voting both from a system perspective and from a voter perspective? What degree of voter participation is sufficient to ensure confidence in accurate representation of actors’ will in system-level decision making. What incentive models are necessary or optimal for producing the necessary level of voter participation? Additionally there is an avenue for community discussion and further research work to explore the parasitic or selfish voting and how to best align incentives between individual voters and system-level goals.

CTA: We need help identifying Key Problems in the space, please help us! Here is our idea about what a Key Problem looks like:

  • Provides direction for individual research efforts and projects
  • Is a broadly applicable question or problem statement
  • Requires many coordinated research efforts to answer or solve
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