In a recent post, my friend @ph1102 asked whether there is voter apathy regarding DHF proposals and he suggested that there should be an incentive for people to use their votes. His post made me think about how we could make the whole governance on hive better.
What are the problems related to hive governance?
When I speak about governance, I mean mainly the two processes that make us vote on witnesses and on DHF proposals. In my opinion both processes are rather unfair and give too much power to big accounts. Let me explain.
Witness voting
Each hive user has 30 witness votes at his disposition to vote for the witnesses that he trusts to run the chain. On Hive there are only 40 whales that own more than 592'000 Hive power according to the stats published by @arcange. Together these 40 whales own 149 millions Hive Power or roughly 49% of all the staked hive in existence.
There are 20 core witnesses that are running the chain and these 20 witnesses get much more rewards than the following witnesses.
In my opinion the governance process to elect witnesses is flawed by the fact that we can vote on 30 witnesses and it's virtually impossible for a witness to get ranked in top 20 without the support of at least some whales.
Proposal voting
Everybody who has staked hive can vote for DHF proposals and his support will be indexed by the quantity of Hive Power that he owns. We have an unlimited amount of votes at our disposal. If we don't want proposals to be funded, we have the option to vote for the return proposal.
The problem that I see here is that again this process is under the whole control of the biggest stake holders. If the whales want it they can fund all the proposals. If they don't want any proposals to pass, they vote for the return proposal and things are more or less blocked.
You might say that whales have earned their stake and I totally agree with you that they should have a bigger influence on the proposals than others. But the problem I see is that whales are very few in number and can quickly take decisions and define who is funded and who is not.
Whales need to have more influence
I don't want to say that whales shouldn't have more influence than other users. I mean they have a lot of money in the chain and it's important that they have a say in who runs the chain and who gets funded. I just think that it would be good to have a system where whales can't leverage their hive power many times.
I thought about it and got some inspiration from other ecosystems and would like to present my idea here for a fairer governance process.
The concept
When voting for witnesses or for DHF proposals, we use our stake to actually define how the reward distribution is. The idea would be to say that each user can spread his HP only once. He has 100% voting power and can distribute his HP accordingly.
Let's take an example:
I have a stake of 30'000. Instead of being able to vote 30 times on witnesses, I could split my vote as I wish. I could vote 30% on witness 1. This vote would represent 30% of 30'000 HP, or 9'000 HP.
This means that I could split my 100% voting power the way I want over how many witnesses that I want. I could also just vote 100% for one single witness.
Now a Whale could split his votes the way he wants too. If he wants to vote 50 witnesses he could spread his power accordingly and give each a 2% vote. If he has 1 million hive power, this would mean that he votes with 20'000 HP on each witness.
For the witness ranking, the active HP voting for each witness would be calculated (HP x vote weight of the voters). The accumulated total would define the rank of each witness in the witness list.
Why would this be better?
If a whale can vote with 1 million hive power on 30 witnesses, it allows him to use his hive power 30 times.
Situation now:
Whale with 1 million HP votes on 30 witnesses- > he wields 30 million HP in the witness selection
Dolphin with 30'000 HP votes on 30 witnesses → he wields 900'000 HP in the witness selection
Difference 29'100'000 HP
With proposed system:
Whale wields a total of 1 million HP
Dolphin wields a total of 30'000 HP
Difference 970'000 HP
If the whale wants to vote on 30 witnesses, each of his vote would be worth 33'000 HP. If the dolphin wants to support only 1 witness his vote would be 30'000 HP. This could level the play field for smaller accounts and also encourage them to power up more hive.
With this idea, a whale still has much more influence than other users which is totally normal. However, he can use his stake only once rather than 30 times before and thereby just increasing the difference in terms of votes. In my opinion this would make the process fairer.
The same could be done for voting on DHF proposals. Each user could split his own HP in as many parts as he wants and vote on proposals or the return proposal. Again here, each user could leverage his HP only once and therefore the whole process would be considerably more balanced.
Example:
I have 30'000 HP and I want to vote as follows:
60% on proposal A – 18'000 HP would be voting for this proposal
30% on proposal B – 9'000 HP would be voting here
10% on return proposal – 3'000 HP would be voting to the return proposal
Like that I have used 100% of my voting power
All proposals that have received more HP votes form users than the return proposal get funded.
Incentives?
Another idea would be to provide incentives for voting on proposals and witnesses. There could be a DHF proposal that actually rewards people who use their voting activity. The same metric could be used to distribute the rewards. For each user, the Hive Power multiplied by the used voting power on proposals and witnesses could define the part of his reward. This would encourage people to get a more active role in governance.
Why change the hive governance?
From what I feel on the chain, there are a lot of people that are profoundly unhappy with how the DHF proposal system works. The proposals often lack form, control and follow up. With the present system, smaller users have little to no say to what is funded and what is not. The proposals are funded rather on the basis of social relations with whales, than on the merit of the proposals themselves. With the proposed system, I believe that whales would have a bit less weight in the process and the proposals would need to convince more people to get funded. In this case, I expect that there would be more social pressure to ensure a better form of the proposal and a close follow up of the projects. Proposals would need to please many not only a few selected ones and this would drive the requirements up in my opinion.
Let's not forget that the DHF has a direct impact on all stake holders. Every HBD distributed over the DHF dilutes the existing hive supply and we fund these proposals by inflating our assets. If a proposal is done well and brings real value to the chain, we would probably all want to support it. However, with the structure that we have now, the funding of the proposals is determined by very few people and in the long term this creates a rather toxic environment that I believe should be changed.
I would be interested in learning what you think about this idea? I hope it could lead to a discussion where we try to improve our system. It's a start...
With @ph1102, I'm running the @liotes project.
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