The majority of people that get into crypto are not looking to engage in layer one governance. It is usually to invest for the goal of a profit, or the crypto network provides some kind of use case they enjoy. However, some have been in crypto for quite some time now and are looking to expand their horizons and participate in governance (a science few people understand) on their favorite crypto networks.
A novice in governance participation must first learn how to assess which networks have censorship resistance adequately; this information will set you on the right foot. The entire point of decentralized governance is censorship resistance from any entity controlling the network. How do you know if a network has censorship resistance? First, you must differentiate a true layer one from layer two (or what should be layer two) and understand the methodology in which technology should be stacked.
The big mistake I see in crypto today is the ego of being a layer one vs. layer two; the names are irrelevant, and the tire does not get angry at the engine; they work together. Only when human behavior is involved do we see people trying to put engines where tires should go and vice versa due to ego and ignoring practical application.
A quick rule of thumb is highly computational (such as smart contracts) or "big" data (such as videos/images) should be on layer two. Layer one smart contracts do not scale because every node in the network has to run every smart contract. With layer two smart contracts, dapps can run the exact smart contracts they want on their own layer two node system. Hive's novel invention allows layer two dapps not to worry about micro forks; it handles it for them, which allows any dapp to rewind and replay the dapps internal state automatically- this allows for easy-to-build and highly secure dapps.
With the immutable storage of text, you can build proper layer two applications. Layer one should consist of the transaction layer and long-form text storage. You can have a fast, scaleable layer one by removing the heavy-duty data and resource-intensive tasks to layer two. Contrary to popular belief, the layer one cannot be slow and expensive it must be fast, cheap, and scalable, allowing layer two to be built more securely with minimized trust. The more the layer two can interact with layer one, the more secure layer two becomes. It is critical to allow layer two to store data at will on layer one without the cost becoming prohibitive.
Nowadays, we see what is called "layer twos." However, due to prohibitive fees, these layer "twos" are forced to batch data on their own separate networks, meaning in between batches, you will need to trust the security of that layer two because the data has yet to be stored on layer one. Essentially, they need to become a layer one in themselves for security, and they rarely communicate with the base layer they are trying to be a layer two for due to prohibitive fees.
The longer the batch time, the more security natively needed for the layer two. Since fees on the most popular PoS networks are high due to having everything IE smart contracts + more on the base layer, the "layer twos" are forced to communicate more infrequently. It is a vicious cycle that ultimately leads to layer twos becoming layer ones that will communicate with another layer one on rare occasions, providing very little security in the grand scheme of things.
Layer twos always need some incentive to secure what it is doing. The more load layer one can take off the layer two, the less cost it will be to secure the layer two. More so, if the layer two can frequently communicate with the layer one, it can easily fork out an attacker without needing to start over or lose a massive amount of data integrity. Having an incorruptible base layer of truth allows dapps to become as efficient as possible with minimized trust needed to operate.
Layer two: Big data storage, dApps, smart contracts, anything that isn't text-based
Layer one: Transactions, Long form text data which encompasses everything text-based such as Accounts, Communities Lists, Followers Lists, text content, etc.
Layer two: Changes often, relies on layer one for most things text-based that it wants to store immutably. It secures its own smart contracts on either a socialized layer two smart contract network or runs its own node infrastructure and incentivizes the smart contracts with their native token or some method of recycling fees to node operators. Since layer two does not need to worry about important things like account balances, transaction history, community/follower list, etc., it can solely focus on its niche, using the exact smart contracts they desire, in the language they want, with predictable fee cost.
Ultimately, big dApps will need to run their own smart contract infrastructure. Because using a socialized smart contract layer, the fees are unpredictable due to the "crypto kitty" effect of unforeseen mass adoption of a dApp overnight, spiking fees for everyone else regardless if your app has anything to do with it or not.
Layer one: heavy-duty governance. Requires no premine, no ICO, no centralized coin distribution, and no founder or the founder must resist the temptation to dominate the network ideals by remaining anonymous.
Coin voting is the foundation for dApps, and centralized coin distribution in any way will destroy the network's censorship resistance. The most important aspect of any chain is its current coin distribution and the projected future potential to distribute governance coins to as many different people in as many countries as possible.
You must have an ongoing incentivized distribution, meaning the coin stakers are incentivized to distribute coins to other people, or the coins will only go to the people staking, and they have no reason aside from selling to part with them. While coin selling is the number one way a coin gets distributed, relying on that alone is not the most optimal solution, especially if the coin governance is controlled by those not looking to sell.
Once the proper technological stack is achieved, the next way to notice if layer one has censorship resistance is if it does not have a centralized coin distribution. The first way to determine if the distribution is good is to see if the layer one coin had any kind of premine or insider sale/ICO. Moreso, the network must not rely on any centralized funding and must have a decentralized incentive mechanism built into the base layer.
The less reliant on centralized outside forces, the more resilient the network becomes as it matures. A centralized coin distribution, coupled with reliance on centralized funding, inevitably leads to centralization—the two most widely used governance systems to date are PoW and coin voting. While PoW is a form of voting, today, we will focus on coin voting.
PoS networks ultimately end up run by large staking pools. In practice, the largest staking pools rely on some form of outside incentive, predominantly a native token to the pool itself. The pool ultimately relies on centralized funding via selling its governance token. It is important to break down exactly how these staking pools are currently working in practice and how in theory, we may be able to tweak them in to have better odds of achieving censorship resistance.
In practice, what we see happening on PoS base layer networks is that staking pools pop up like mini centralized DPoS networks that ultimately run the network. Whichever pool can offer the best deal to the stakers gets the most stakers; the pool with the most stakers and liquidity can offer the best deals, a virtuous cycle that ends with one giant pool in the end that runs the entire network. Since the staking pool is not supported by base layer decentralized incentives to upkeep the smart contracts and to run the pool's maintenance, the pools become centralized in governance. Staking pools adopt various ways to vote in validators; for instance, some pools choose the top validators, and governance token holders can then vote on those vetted validators. Another example is voting in as many validators as you want, with no vetting process, using the native token.
Forcing off-chain voting delegation coupled with no base layer incentives built in to support the maintenance of the pool creates centralized staking pools. Hive witnesses are paid via the onchain incentives based on their vote ranking. They do not need to create their own token to support their witness; they are paid to do so. There is no overhead with smart contracts to be maintained and upgraded because the voting is all done onchain as a feature.
Moreover, HiveGov (DPoS in general) is harder to overtake via money attack; 51% on HiveGov vs. 34% on POS. The more nodes you have, the less % of them can be used to validate at any one time.- This makes HiveGov more resilient to money attacks because the attacker needs to get almost twice as much coin to attack the network consistently.
Comparing PoS vs. HiveGov is the wrong approach for the sake of attacking the other without constructive criticism is not optimal. A better approach is to see how they can help each other. If we set ego aside and look at the facts, you'll see that PoS and HiveGov are not only helpful to each other but also essential. PoS is the leaves of HiveGov tree.
If we simply look at both of them as coin voting, one with on-chain voting and a parameterized minimum validator count to become operational, you'll start to see where both have strengths and weaknesses. And mind you, I said the broad term "PoS," but not all PoS networks are the same either; there are parameterized PoS networks that act better in practice than your traditional unparameterized PoS networks. One such is how dexes are built using honeycomb tech. This example would be, the top x amount of validators, let's say 20, have all equal say. So you have your PoS, but the benefit of parametered validator count.
Since DPoS requires human bandwidth to vote, the more DPoS-type networks you have, the more watered down the voters become, the newer networks- This is where PoS-type networks thrive because they can rely on the layer one for security and not have to worry about voting others in. Therefore you can infinitely scale PoS networks without the worry of the governance becoming fragile. Both have their strengths and, when combined, form a formidable foe.
To be continued...
previous: @theycallmedan/why-hive-series-pos-vs-hivegov
And if you don't love me now, you will never love me again. I can still hear you saying you would never break the chain. - the chain