This thread will contain thoughts and discussions about the governance model to-be. The purpose of the series is to facilitate a discussion around a sustainable self-governed distributed ledger system. We will return to the origin of the system and try to define all the terms that are used, and from there we will deep-dive into the question about sustaining governance models.
As the discussion in i25s progresses we learned that it became increasingly more important to be specific in our choice of words and communication of the Tagion terminology. We will utilize a combined SES (Socio-ecological system) /IAD (Institutional Analysis and Development) framework that are adapted to the need of the analysis.
We need to define what is included in the Tagion system - The Resource System, Resource Unit, Actors, and Action Situations. The aim is ultimately to establish a governance model that can content with all layers of complexity.
(Cole, 2019) defines the resource system as what generates the flow of resource units or benefits over time. The technical part of Tagion system can be categorized following a rigidity principle.
The Core components are the backbone of the system. Being for instance, the Tagion HashGraph, Distributed databases (DART) and the gossip protocol etc. These components are rigid in nature, and are challenging to perform changes to, due to critical business- and technical impact. Foundation is the scripted functions to manage the core components providing the core with directions. The Scripting Engine provides the governance rules that will be derived from this analysis, which will be constructed on top of the foundation.
From a commercial perspective we will argue that the live network also is a part of the resource system, as well as the node environment that operates the live network.
The actors can be categorized as below utilizing the conceptualization of actors by (Orstrom, 2015).
- Appropriators: Nodes
- Producers: Tagion Community and developers
- Providers: i25s and restricted external actors
Appropriators withdrawn from the resources within the system (Orstrom, 2015). Nodes operating the system appropriates from the common pool resource running the network and thereby retrieving rewards embedded in the system. Furthermore, a node persists a fair bit of management rights in the system. A node can choose to follow the governance that will be established, thereby choosing to support the current strategic direction – that means only posting valid transactions to the ledger and decision-making in the event of disproportional communication. Producers are any individual that constructs, repair or take any actions that ensure the long-term stability of the common pool resource (CPR) (Orstrom, 2015). The producers of network will be the Tagion community and developers that iteratively are further developing and optimizing the system through a voting culture on recommendations for optimization. Providers arrange for the provision of the resources (Orstrom, 2015). Providers are centralized a bit around the i25s company (its founders and employees) and potentially a small pool of external actors . Lastly, there exist an additional actor which is the users of the network making the transactions in the system. The users are distinct from the conceptualization of actors provided by Orstom but should still be included since they play a vital role in the system. Without user adoption the Tagion network is not valuable as a potential alternative to the current monetary system and the described actors (appropriators, providers, and producers) will not exist in the long-term.
- Tagion Currency
The main resource unit in the network is the Tagion currency . Tagion is a currency like Bitcoin and Ethereum that can be traded in the future for other products and services or convert to other currencies. As (Mellor, 2010) argues money is a social construct that only has value because the general population trusts the phenomenon. If the population loses faith in the currency the value would potentially be reduced to zero. Hence it is crucial to address the stability dimension. The Tagion currency is a non-collateralized currency, meaning that it is not related to any other currency or assets, keeping it as an independent monetary system. The stability of the currency will be handled by the supply of money. The supply of money will be approached in two phases keeping the intrinsic price level stable. (1) Firstly, a stable money supply. (2) Secondly, an algorithm that smooths the money supply based on internal network factors as adoption rate and velocity. By modelling these factors, it will provide the algorithm with input to regulate the money supply and keep the intrinsic value stable. By regulating the money supply the question of deflation and inflation are addressed. How to manage the resource units of the system are related to the idea of economic governance. The external value of the Tagion currency will be determined by the interest in the Tagion currency. This correlates to the idea of the stock market manifesting a simple bid-and-ask process. The internal and external aspect will both ultimately impact the value of Tagions. Furthermore, it is possible to categorize the information stored in the ledger as a resource unit, because it provides knowledge about behavior of the different actors participating in the network.
Following the doctrine of Orstrom there exist three levels of action situations that all should be addressed with governance for each level.
The operational choice level is the node environment where nodes make decisions that affect the daily operation of the live network. The daily action contains decision of communication, consensus and changing between stages etc. Ultimately, the objective of the governance of the operational choice level is to provide incentives for 2/3 of the nodes in the network to achieve consensus. This is a challenge since the right to take part in operating the network and the related rewards is a common property right, hence available to everyone that wishes to participate. The collective choice level is where the Tagion community and developers votes on decisions regarding the operational choice level. Questions that could be addressed are decisions as to who can appropriate from the Common Pool Resource (being the rewards generated from performing transactions) and when? And how to share the benefits between the appropriators, and if it should be an equal distribution of appropriation rights and decision rights? The collective choice level ultimately negotiates rules for the governance model of the operational choice level and implement it to the Scripting engine . What is important to emphasize is that this research provides a preliminary governance design, but the outcome should be subject for ongoing discussion which the collective choice level provides a platform for. Governance for how to take decentralized decision in the collective choice level should also be established. The Constitutional choice level are engaged with more profound questions about the direction and strategy of the Tagion network. That can include choices as to who can participate in these negotiations and voting culture around potential new builds to the foundation and core components . New builds could for instance include potential joint ventures with other companies to build applications on top of the network and integrating them. Participant of the constitutional level decides and modifies the governance model for the collective choice level. Governance on the constitutional level will be a more centralized approach with fewer actors included in the decision-making process. i25s will be a central actor in these processes but will not explicitly exclude external actors .
A relation between the terms is outlined in below table.
Please share any thoughts, concerns, ideas, questions, or comments you may have. All inputs are greatly appreciated, and we are more than happy to engage in dialog.
The next posts of the series will concentrate its energy on identifying the processes of operational choice level and related envisioned governance.
Cole, D. H., 2019. Combining the IAD and SES Frameworks. International Journal of the Commons, Volume 13, p. 244–275.
Mellor, M., 2010. The Future of Money.
Orstrom, E., 2015. Governing the Commons.