In the cryptocurrency space, there is this pervading question of what it means to be decentralized. There have been spars between different cryptocurrency ecosystems that their cryptocurrency is the most decentralized. Before we go any further, we have to define what decentralization means.
Decentralization according to Wikipedia is the process by which the activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group. This is the backbone upon which Bitcoin rests. When Satoshi Nakamato, a person or group of persons, came out with the whitepaper, the person or persons were anonymous so that no centralized figure/s was in charge of leading the movement. Satoshi wanted everybody to be able to participate in this revolution of money. Satoshi saw the kind of power that centralized forms of governments, like the central bank could do concerning the money supply so he embarked on this revolution of money as we know it.
It has been the case from history that countries and organizations where people feel that they have a say work better. Organizations or countries that have decentralized forms of governance fare better than centralized ones. Now this does not mean that centralization is an evil thing because there are situations especially in emergencies where it best to have a centralized figure or person make a decision before things go from bad to worse.
Anyway, one of the areas in cryptocurrency where the issue of decentralization has come up a lot is in the securing the network or what we call mining. Mining is simply the validation of transactions in the network to prevent what is called double spending. Miners get rewarded with block rewards and/or transaction fees. Simply put if miners are able to acquire more than fifty one percent of the power to validate the network, they can attack the network and be able to double spend.
Initially, when Bitcoin came up, people were able to mine it from their regular PCs and laptops, but with the development of ASIC miners that are able to do more computation, the regular folks could not mine Bitcoin anymore. Different groups found it was more beneficial to merge together as mining pools. From studies, the biggest mining pool, Bitmain owns subsidiary pools and if combined together has more than fifty one percent of the validation power. Now that it is probably in their interest not to attack the network, but it is scary just to think that the potential exists.
This was one of the reasons that Dan Larimer of Block One came up with delegated proof of stake (dPOS) where there is a certain amount of Block producers and they can be voted in or out depending on the community. Now this was implemented in EOS but when it launched, people immediately realized that people that had a lot of EOS tokens could keep poor performing block producers from being voted out. Some block producers were suspected of colluding and it got so bad that Block One threatened to step in and vote with their tokens. Block One owns about ten percent of the tokens so they have significant influence. People have questioned whether an entity should have that much voting power. This is a topic for another day.
The guys at Telos wanted to curb this kind of power so they came up with some solutions. About 1.6% of the wallet addresses owned 90% of the EOS tokens. The distribution of Telos using the genesis snapshot will be capped at 40k Telos tokens. This will greatly reduce the power of people with huge amounts of tokens. Secondly, there will be inverse voting which will make the weight of a person’s voting go up when they vote for more producers. This removes people with lots of tokens to keep less perfoming block producers from getting voted out by voting for just these few block producers. This will lead to greater distribution and decentralization of the network. Also there are minimum requirements that the block producers must maintain and this will be monitored by smart contracts and other disinterested groups to ensure compliance. Any kind of attacks on the network by a Block Producer will be met with swift and decisive penalties by other Block Producers.
Right now, the arbitrators that try to solve issues on EOS are appointed. After the EOS network went live, certain issues came up and people had their accounts frozen. There was an uproar because people questioned the authority of these arbitrators since these arbitrators were not elected by the community. Telos will be changing that because Telos arbitrators will be elected by the community. It is the world’s first governed blockchain with elected arbitrators. This gives people more say in who arbitrates for them. When people feel like they have a say in electing the people that will be judging their different conflicts, they feel empowered that their responses are heard and are dealt with more independently. This set up leads to greater decentralization of the network.
Telos foundation is an apolitical body with a mission to aid and guide in the improvement of the Telos network. It has no role in network governance. Anybody from the Telos community can be nominated to be a board nominee. These board nominees will be voted in by the community. Telos will be the one of world’s first governed blockchain where the foundation board members are elected and not appointed. The board members are elected by those that have the Telos Foundation Voting Tokens (TFVT). The Telos foundation does not vote it’s tokens or issue positions on voting matters or BP selection. The initial distribution of the TFVT shall be based on the contribution of those launching the network. Contributors to the Telos community rewards may also earn TFVT tokens. This way the people that are contributing to the community play a big role in the direction of the Telos network.
We have had issues in this space where different members of the foundation hijacked the projects and these projects ended up losing credibility with their community. In one of these projects, the founders of the network had to take the foundation director to court. These proceedings took a while and eventually the guy stepped down but this had dampened the spirit of the community. Since the contributing members of the community had no say so, they had to watch as this project they invested in imploded right before their eyes. Fortunately this project is recovering from this drama. If this board director had been elected and not appointed, he would have been easily voted out if is found that his actions were detrimental to the community. This is what Telos network will be solving with the election of the foundation board. This definitely will lead to better decentralization of the network.
On a side note one of the things that impressed me the most was what happened when I noticed that Douglas Horn of Good Block was not a board nominee on the Telos foundation. I thought that it was weird since he has really been the guy that is almost like the face or voice of the Telos network. I wanted make sure that he was part of the nomination and contacted him. I wanted to nominate him as a board nominee for all that he has done for the network. His reply was that he was not interested at this time and that there were other qualified people being nominated. I have been in the space for a while and what I have discovered is that there is a lot of power grab, especially when a person is one of the pioneers of the network. The people still want to hold onto that power. But here is one of the pillars of Telos network that chose to step aside so others can lead the network. My respect for this project was already impressive but this response just got it up a few more notches. I don’t know him personally, but I believe that this was the spirit that Satoshi Nakamato came with to this Crypto space. A space that is created by the community, of the community and for the community. This is what decentralization is about. This is how we can all win in this space.
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