Juno's Proposal 16 Vote Is a Watershed for Blockchain Governance – For Better or Worse

For possibly the archetypal time, a blockchain assemblage has formally voted to confiscate a user’s funds.

Proposal 16, a governance connection connected the Cosmos-based Juno blockchain, has passed via the chain’s token-voting governance system. The connection signals assemblage support to chopped the equilibrium of JUNO tokens held by a “whale,” oregon ample holder, accused of manipulating the Juno motorboat airdrop enacted successful October. The program is highly notable due to the fact that it appears to people the archetypal large lawsuit of on-chain governance being utilized to change a user’s token balance.

The ballot initially seemed apt to walk with a beardown bulk due to the fact that it was wide seen arsenic correcting thing akin to a theft. But successful caller days a assortment of stakers and developers person publicly signaled their opposition retired of interest specified a determination would undermine the perceived rules-based trustworthiness of the system, oregon its “immutability.”

The whale accused of manipulating the airdrop (a benignant of crypto giveaway), meanwhile, represented itself arsenic an concern radical alternatively than an idiosyncratic successful statements defending its behavior up of the vote. In part, the whale argued the wallet splitting that appeared to beryllium “gaming” the airdrop was successful information intended to serve its clients. The whale stated it considered the airdropped funds to rightfully beryllium to those clients. Those claims were met with important skepticism, but whitethorn person influenced immoderate to ballot against the proposal.

The Proposal 16 vote by Juno holders was yet precise close. The last ballot tally was 40.85% Yes, 33.76% No, 3.59% No with Veto, and 21.79% Abstain. (“No With Veto” is simply a voting enactment connected Cosmos systems that signals content the connection itself is harmful and tin effect successful penalties for the proposer.)

The closeness of the ballot is apt to heighten hostility arsenic the Juno assemblage moves to instrumentality the edict, overmuch arsenic an authoritative elected by a slim borderline lacks a “mandate to govern.” This is an contented because, first, Prop. 16 was what’s sometimes referred to arsenic a “signaling proposal,” and a consequent connection volition beryllium needed to outline the circumstantial implementation of the decision. (The Juno whale’s tokens are presently locked and should not beryllium capable to determination to dodge the haircut.)

That implementation volition not beryllium frictionless. Different on-chain governance systems let antithetic parameters to beryllium changed automatically via vote. Juno, and astir akin systems based connected Tendermint open-source software, let automated changes of strategy parameters for aboriginal issuance, but not alteration of existent balances.

Instead, implementing Proposal 16 would necessitate a hard fork, oregon backward-incompatible codification change, to Juno. That would impact taking a “snapshot” of the chain’s authorities (how galore tokens each code owned astatine a constituent of time), altering the whale’s equilibrium and restarting the chain. This is fundamentally the aforesaid process that followed the immense 2016 hack of The DAO connected Ethereum, though that fork was spearheaded by Ethereum’s founders, with nary on-chain process.

“If idiosyncratic [hypothetically] passed a signaling connection that said each coins indispensable determination to immoderate wallet, by coercing everyone to enactment it on-chain … [u]nless validators willingly coordinate connected the hard fork, it inactive won’t happen,” according to Tor Bair, laminitis of the Cosmos-based privacy web Secret.

There is an added complication to doing a hard fork alternatively than an automated parameter change. Validators, the equivalent of Bitcoin’s miners connected Cosmos and different proof-of-stake systems, could take to proceed monitoring transactions for the archetypal chain, arsenic with immoderate blockchain hard fork. But determination would apt beryllium fewer users remaining connected that chain, peculiarly aft the fork of a comparatively tiny task similar Juno, making the prime to proceed the archetypal concatenation financially risky for validators.

Finally, the ballot whitethorn person highlighted a imaginable governance-based onslaught vector that hadn’t been wide considered. The rules for the Juno airdrop were archetypal published successful August, but according to archived versions of the page a proviso limiting the airdrop to 1 lawsuit “per idiosyncratic oregon entity” was added astatine an chartless consequent date.

That clause has been utilized to rally enactment for Proposal 16 due to the fact that it would mean the airdrop gamer violated not conscionable the tone of the process, but the bright-line missive of the rules. Yet, depending connected erstwhile the “person oregon entity” clause was added, the statement begins to look misleading.

The complexity of each this, though, whitethorn distract from a cardinal information of blockchain systems. On-chain voting systems whitethorn supply a furniture of communication, coordination and formality, but yet the mechanics for making truly large changes remains fundamentally the same. When a cadre of dissident bitcoiners cloned Bitcoin and accrued the artifact size to create Bitcoin Cash, they were fundamentally voting with their feet. Few blockchain systems person effectual means of preventing specified forks, whether they’re utilized to displacement an operating parameter, oregon to instrumentality distant someone’s money.

“There is ever a hazard of immutability,” says Bair. “It’s a hard fork, astatine the extremity of the day.”