TL;DR
Mistakes have been made. Let’s try not to make new ones by blaming decentralization and contests. Let’s move on. Kill sub-governances. Kill partnerships. Apply contests when necessary. Apply direct funding when appropriate. Create a Decentralized Governance Fund (DGF) to support decentralization and entrepreneurship with everything we have.
The proposal is at the end of the text, you can scroll to my proposals directly if you are not interested in logic behind them.
Mistakes have been made
Without pointing fingers let’s agree mistakes were made in regard to use of public funds in the first year of Free TON (now Everscale). Analyzing those mistakes is important in order to reach correct decisions in the future.
It is common theme in Everscale community today to blame sub-governance and contests for current state of affairs. When asked “what state of affairs” the usual answer is the token price. I believe this whole logic chain is flawed. The danger is that if we continue to trump that horn even more wrong decisions will be taken. We will simply kill everything good that have been created, ruin whatever small community we do have and destroy our identity. This will trigger the end of this project and network, not the fallen token price. Many networks had their tokens almost near zero price. Didn’t kill them. Cause they were true to their values, true to their community, true to the principles of decentralization. There are still scam projects around us, but eventually all of them will die. Because sooner or later investors in these project will wake up to the reality of a Naked King.
The token price is not the problem, the growth of the community is, the technological progress is. And the contests are not the problem of the community growth or technological progress — the system that creates them is. We can stop token distributions, we can transfer all tokens to some Central Committee, that will supposedly make more effective choices, we can even declare our own private Communism… the end of all such initiative will lead to total destruction of value, because no value has ever been created this way.
Economics and history teaches us only one lesson about creation of value. That the value has always been created by entrepreneurs. And by entrepreneurs only! If we want the token price and the value of this network to grow — there is only one way and that is even not subject to debate — attract entrepreneurs. Not developers, not investors, not users. Entrepreneurs.
I wrote about it in the White Paper, in the BFTG paper and repeated in more or less every debate we ever had about it.
Ok let’s look at this from the positive side — sub-governances were an experiment that failed miserably. We need to destroy that structure. Completely.
Same goes for the Partnership Giver. Let’s admit this giver and enormous number of tokens in it was created while thinking that Telegram one day will adopt this blockchain. The decision to destroy these tokens was correct one. Now we need to destroy the partnership Giver all together, stop any partnership proposals we may have.
Some of you may say, but we had Sub-governance X or the Partnership Y that were successful, shouldn’t we just improve the system so it will be more of those and less of the failed ones? Yes we did, no we can’t. There is no way to improve that system in general. Because all successful sub-governance and all successful partnerships were based on personal integrity and leadership properties of very few people. We can not replicate those people. This is not a system and it may never be.
In "On Nathan Schneider on the limits of cryptoeconomics", Vitalik Buterin correctly points out:
So what’s the problem with finance? Well, if finance is optimized and structured collusion, then we can look for places where finance causes problems by using our existing economic tools to understand which mechanisms break if you introduce collusion!.. Even worse, cooperative game theory suggests that there might be no possible way to make a fully collusion-resistant governance mechanism.
Contrary to what I said above, contests themselves are not the problem. The way we produce them and the way we apply them are.
What contests are good for:
- When public funds need to be distributed for a work that must be done for a public good and can not be supported through entrepreneurship (because public tenders are prone to corruption).
- When several solution to the same problem are beneficiary (because grants are based on past achievements).
What we did instead was trying to apply the contest model to everything at all and we gave the decision to run them to almost everybody. This was asking for collusion. It is very easy to drain tokens from the giver using this or any other mechanism if your whole target is… to drain tokens from the giver. It does not really matter if it is a Subgovernance or any other institute as long as it runs by people with wrong motivation. I am very far from saying all those people had bad intentions on purpose. It is simply that any motivation apart from “creating value” is a wrong one. And the only mechanism that ensures the value creation is “entrepreneurship”. It is simply how economics work.
The BFTG paper describes a way how to try to create a non corrupted mechanism for distribution of public goods. We never finished implementation of the BFTG system itself. This is telling. This should be an indication of the difference between entrepreneurship efficiency and public funding inefficiency in general. Does not matter if this funding is provided under Grant, Contest, by sub-governance or foundation. The results are almost always the same.
We must turn this upside down: take a risk, create a system, prove it works, receive the funding.
Proposal
- Cancel all future sub-governances
- Budgets that sub-governances have now should be put into the task of finishing developing of infrastructure projects that can not be commercialized by itself (like protocol and system contract developments)
- Cancel and stop all partnership proposals.
- Support Entrepreneurship via an Everscale Decentralized Governance Fund (DGF) as described below (and in the white paper).
Decentralized Governance Fund
Decentralize Governance Fund should provide a community support through other community Funds (CF) to act like a fund of funds.
The DGF will run Periodic contests for Community Funds. The contest rules principles are described below. The winning CF designs and implementations will receive token support from DGF always in the form of participation on top of private funding.
Community Funds contest general rules:
- CF must only accept submissions from entirely on-chain projects
– that means no projects which business is not generated on-chain, revenues collected on-chain and products delivered on-chain. - All CF process must be on-chain via system of smart contracts
– means all CF processes, including its governance, decision making and funds distribution must be on-chain - CF must have its own governance token (CFGT)
- CFGT must be tradable on at least one of the Everscale DEXes
- Projects accepted by CF must have Governance Token (PGT) that captures value of the project products, collecting all project revenues on-chain
- PGT must have clearly explained, documented mechanics and finite supply
- As part of CF funding PGT must be listed on at least one of the Everscale DEXes.
- CF must facilitate both funding and liquidity as part of the funding criteria
- CF must collect funds from the public and demonstrate that clearly
Each contest winner shall not receive more than 10 m. Evers support at a time. Previous winners can only apply for new findings if they show a positive balance of operations of their portfolio’s PGTs, reflected also in the price of their CFGT.
DGF will provide a support for winning of the Periodic contests in a form of Quadratic or Linear Funding on top of the CF own funds invested in PGTs via holding of the CFGT tokens, but won’t take any part in the CF investment decision processes.
DGF will be managed by its own Governance Token (DGFGT) which will be provided to any community member willing to prove ownership of 1 mln Evers. 1 DGFGT will be minted towards wallet smart contract holding directly or via any available defi instruments (staking, farming, wrapped and so on) of 1 mln Evers
.