Where will EOS's 6-month voting lock-up period end?

Chainpool.io is a platform that provides mining pool services for high-quality public chains. On March 21, 2018, EOSGO announced that the chainpool node chainpool.io has joined the list of candidates for this batch of EOS super nodes!

On the same day , Thomas Cox, Vice President of Product Development at Block.One and an expert in blockchain community governance, made the following statement on Steemit regarding EOS’s six-month voting lock-up period:

When the EOSIO blockchain software team threw its weight behind a token voting mechanism in June 2017 , which required EOS tokens to be locked up for six months before they could participate in votes, the move delighted some fans and angered others.

Previously , Block.one ’s CTO Dan Larimer announced that the EOS.IO software will abandon the 6 -month token lock-up period.

Why?

It is mainly based on three considerations:

1. The token short-selling mechanism is mature.

2. Feedback from the community.

3.   Steemit ’s past experience.

Let’s analyze this in detail, but first we need to know why there is a 6 -month lock-up period for tokens?

The original intention of the 6- month token lock-up period

Every feature in the system is designed to achieve one or more specific goals. For EOSIO , the main concern is how we can enable community members to make deliberate votes that will advance the entire ecosystem.

I have written before: The healthy development of the EOSIO platform requires token holders to cast careful and wise votes for block producers and system upgrade proposals, which requires the efforts and judgment of token holders.

But there are other factors that motivate people to vote, including:

Weird idea

Think you can expect the masses to be rational? Not really. Two words can explain: Boaty McBoatface (the British government solicited opinions from netizens to name a polar research ship worth $ 287 million, and finally had to suspend it because netizens kept providing ridiculous and funny names). A good governance system should have a corresponding punishment mechanism for those unreasonable voting behaviors (which do not cause losses to voters but harm the healthy development of the system).

Greed and bribery

There are blockchain projects where block producers openly pay for votes to qualify as producers. These voters generally have little interest in the health of the chain, but are very interested in getting as much profit as possible. These chains are not very successful, and there is ample reason to believe that vote buying will harm the EOSIO mainnet. Some people will say " greed is good " , but the fact is that self-interest will harm the public if there is no corresponding incentive to align the interests of the individual with the interests of the majority.

Every effective free market includes robust anti-corruption measures. The governance of the EOSIO ecosystem also needs to take measures to minimize corruption.

Increase shipments

It is not difficult to come up with some incentives to facilitate voting that may increase the price of tokens in the short term but are harmful in the long run. In order to have a healthy blockchain ecosystem, such incentives must be curbed.

Malicious

Some people want to destroy certain chains for various reasons, such as jealousy, resentment, or competition. It is wise to make such malicious behavior costly and difficult to execute.

Binding of interests

The 6 -month token lock-up period is designed to expose the tokens held by voters to price fluctuations for a long time, thereby binding their interests and encouraging them not to take actions that harm the ecosystem. The logic is that the interests of voters will be harmed. If his vote is not conducive to the development of the chain, and he knows that he will be affected, then he will have a greater motivation to carefully consider actions that harm the chain.

The token short selling mechanism has been perfected

When the 6 -month token lockup mechanism was first used to encourage reasonable voting and discourage unwarranted, bribery, malicious or greedy voting, there was no easy way to short the tokens.

That has changed. Many cryptocurrencies and tokens can now be shorted easily, and it is becoming easier and easier.

This means that those who want to make adverse moves on the chain can buy (long) tokens on the chain and sell (short) tokens on the exchange at the same time as long as they have enough money. In this way, the purchase and sale offset each other (called " hedging " in stock trading ), and the price of the token is not so important (if the price rises, the money lost by shorting is equal to the profit brought by the price increase, and the net value does not change much in the end).

With the improvement and rise of token shorting mechanisms, the effectiveness of using a six- month token lock-up period to bind interests and prevent sabotage has been greatly reduced, at least for sophisticated and organized sabotage.

Community Feedback

The 6 -month token lock has been controversial.

Some of the accusations are wrong, but some are correct. The main point of the argument is that this lock-up mechanism will greatly suppress small-scale token holders or reduce their voting ratio. Especially for DApps service providers, they may need a large number of tokens to maintain bandwidth, and there will not be many left for voting.

Therefore, canceling the 6 -month token lock-up system will allow more token holders to participate in voting.

Steemit ’s past experience

Previously, the Steemit blockchain platform attempted to bind interests by locking tokens for 3 months.

Recent studies have shown that this lock-in can have a non-negligible adverse effect on voting patterns.

Summarize

For the reasons stated above, a 6 -month token lockup is no longer considered an effective way to achieve the desired goal.

As Lawrence Lessig describes in the New Chicago Model, there are four forces that govern what people do online — laws, code, market forces, and social forces.

The removal of the 6 -month token lockup means that the EOSIO governance design team has given up on the code approach to how to enable token holders to make an intelligent vote. However, we can expect the governance design team to continue to use these four forces to achieve effective community governance and create a vibrant and healthy blockchain ecosystem.