The importance of a written constitution in Tgrade
By: Martin Worner
Tags: Blockchain, Constitution, Governance

Photo by Boudewijn Huysmans on Unsplash

At the heart of a blockchain, there needs to be a written constitution on what the rules of governance are. There is an argument that the constitution should be encapsulated in code and use game theory to ensure the expected behaviour is arrived at through a system or rewards and punishments. This “code is law” is brittle as there are a myriad of edge cases which cannot possibly be found with 100% confidence, and there are also no provisions in an encoded/automatic constitution for effective dispute resolution and importantly there is no room for interpretation.

Legal systems around the world work on either written constitutions or use case law/precedence and no matter what system is in place the laws are interpreted. The interpretation is done by humans and cannot be replicated by machines.

The tricky part in blockchain is to construct a system that retains the importance of decentralisation and not introducing a centralised court or supervision, while introducing a human element to interpretation.

In previous articles the governance of Proof of Engagement was explored and how this fed into the ideas around a Decentralised Social Organisation. The inspiration for some of these concepts were from Commons, where the organisation of people and resources have a set of rules, dispute resolution mechanisms, and degrees of punishments should members break rules.

There are several elements to the constitution of Tgrade, which have specific roles while retaining decentralisation. There are three principal, self-sovereign, committees; Oversight Community, Circuit Breaker, and Arbiter Pool.

The main committee is the Oversight Community which has an important role in the Proof of Engagement mechanism, namely in mapping of blockchain addresses to real people, and in the allocation of Engagement Rewards. The introduction of Engagement Rewards to a blockchain is a powerful incentive for all the participants, not a select few, to be involved in running the blockchain. In addition the Oversight Community have further governance responsibilities such as being able to jail Validators who can be shown to demonstrate malicious behaviour such as going offline, and for shutting down smart contracts such as Ponzi schemes.

As a check to the Oversight Community, is the Arbiter Pool, this committee is fully independent of the Oversight Community and has two functions; the first is around dispute resolution where two parties can register and abide by the decisions made by the Arbiters, and the second is around making reasoned decisions on the constitution, these reasoned decisions are published and act as guidance in how to interpret the constitution.

The Circuit Breaker committee is a committee with a single purpose of suspending pegs and connections when necessary.

Photo by Annie Spratt on Unsplash

Oversight Community

The Oversight Community is a self-sovereign community with the responsibility of overseeing the Engagement Rewards (ER) on a Proof of Engagement chain. There are mechanisms around adding, and removing members (both good and bad leavers). The committee members verify the identity of the address holders through off-chain verification which needs to be done in order that ER can be allocated.

Additionally the Oversight Community have responsibilities to monitor the deployment of DeFi smart contracts, and if they detect an “un-reputable” or a scam contract such as a Ponzi scheme they have the governance tools to suspend a contract. There are also mechanisms for the Oversight Community if malicious, yet hard to define attacks, that Validators may do that would result in either slashing Engagement Rewards or Jailing Validators. Finally the Oversight Community has the ability to remove members of the Circuit Breaker committee if they behave maliciously.

Who should join the Oversight Community? Why should you join?

The role of the Oversight Committee is at the heart of a Proof of Engagement blockchain, and is key for the Tgrade blockchain.

The role involves working with the engaged parties of the blockchain, establishing the link between the addresses and identity is the foundation of allocating Engagement Rewards. There is a community element where the members discuss who has been active and what has been contributed, this then feeds into the monthly votes on who is allocated Engagement Rewards.

The Oversight Community members are rewarded for their work through Engagement Rewards and these are used in the distribution of rewards which derive from transaction fees and commissions.

Arbiter Pool

The role of the Arbiters is to make reasoned decisions where there are aspects of the constitution that need interpreting or clarifying. The decisions are held in a public repository and are used in future decision making and where appropriate feeds into any amendments to the constitution (which should be seen as a living document).

The Arbiters also have a role in dispute resolution and there is a governance process around raising disputes and the decision of the Arbiter is final.

Arbiters are allocated Engagement Rewards for the reasoned decision making, in addition there are fees charged for the arbitration service that both parties are required to pay and these are distributed to the Arbiter(s) on conclusion of the arbitration case.

The Arbiter Pool is an ideal place for legal professionals to have an active role in an evolving blockchain governance field and who are interested in the development of constitutions.

Circuit Breaker

We know from history that currency pegs come under attack from arbitrageurs, think of the end of Bretton Woods and the European Exchange Mechanism that saw GBP come under sustained pressure before leaving.

The Circuit Breaker committee have the function of suspending, in the unlikely event of an attack, a peg or an IBC connected chain.

The Circuit Breaker committee members earn Engagement Rewards for their work.

Why all this complexity? Could it not be simpler without all the committees?

The constitution has been written to make the governance as transparent as possible and to provide the governance mechanisms to support the blockchain, especially to meet the objectives of the Proof of Engagement mechanisms. The committees exist to bring in human judgement and interpretation to the constitution which will foster good decision making and avoid complexity in programming rules and game theory.

The Arbiter pool is important as an independent committee as a check to the Oversight Community and plays a role in developing the constitution. The Oversight Community are required in order for Proof of Engagement to fully function. Finally the Circuit Breaker committee is in place as long as Pegs and Bridges are needed and while they may never have to act, having the structure in place ensures that timely action can be taken.

Blockchains are complex and either complexity is in the code which introduces rigidity to the governance or the committee structure bringing in human judgement. For Tgrade having human judgement and whole community involvement is important as it makes a more robust chain.

Interested in getting involved? Get in touch!

We need committee members for all of the committees to begin the road to the full self-sovereign governance model. We will be building the tooling to make it easy to take part and manage the governance processes, and will make announcements as and when the components are ready.

If you want to get involved and join the committees we will be looking for people to get involved in the testnets prior to the mainnet launch of Tgrade. Please get in touch via Telegram