BTC is also a public chain, but there is no so-called governance issue.

Written by: Liu Jiao Lian

During a community chain project meeting over the weekend, I shared some thoughts on the governance issues of public chains.

First, let’s discuss why the so-called governance issues of public chains arise.

BTC is also a public chain, but there is no so-called governance issue. Why? Because BTC has no governance, at least not the on-chain voting governance mechanism that people usually think of.

It is generally believed that within the entire BTC ecosystem, there are three forces that compete and achieve balance, thus mutually restraining and checking each other. These three forces are: the maintainers who hold the authority to modify client code; the miners who hold the power to produce blocks on the blockchain; and the holders who own BTC and can vote with their feet.

If the code maintainers unilaterally merge and release rule code that has not gained widespread consensus, they will face resistance from miners who refuse to adopt that version of the software. In severe cases, they may face a sell-off from holders, leading to a final rejection of the project. Besides resistance and fleeing, miners and holders can also choose to support other maintainers' software versions, thereby causing a particular maintainer team and its products to be abandoned by the market.

If miners violate consensus and attempt to seize control of the code, they will face unanimous opposition and condemnation from the developer community and holders. The developer community and holders can abandon the chain hijacked by a minority of miners and continue to operate the original chain that aligns with community consensus. However, the dark forest principle tells us that this only applies when the total hash power controlled by the usurping miners is less than that of the miners supporting the original chain; otherwise, the usurping miners can use overwhelming hash power to attack the original chain and completely destroy it.

This illustrates the dialectical relationship between the gun and the pen. The gun represents material power, which has a decisive role. But who commands the gun? The pen. The pen is not just a passive implementation of code; it actively shapes the community's consensus. Therefore, all struggles ultimately boil down to ideological struggles. How can the pen command the gun? The key lies in the pen representing the will of the people, embodying the broadest consensus, and reflecting the ideals of the largest segment of the community.

Who are the people of the community? Are they the holders? Not entirely. The holders who support BTC are the people of the community; those who oppose BTC are traitors and the targets of struggle; non-holders who support BTC are friends and part of the united front; non-holders who oppose BTC are enemies and competitors.

Among the people, there may be different proposals regarding the technical route, as long as everyone supports BTC, it is an internal contradiction among the people that can be negotiated and reconciled. However, if someone aims to oppose BTC or even overthrow it, they become the target of the people's resolute struggle and dictatorship. For those under dictatorship, they must be firmly oppressed, deprived of their freedom of speech, and expelled from the community. In simple terms, the constitution only protects the rights of the people, while traitors have no right to enjoy the rights that only the people deserve.

Therefore, it is evident that any ideology will firmly reject those who do not agree with or oppose it. The most important thing for the pen is to figure out how to unite the largest number of people, gain their support, and thus empower the community with the greatest strength.

Internet platforms combine the pen and the gun, leading users to choose between enduring or angrily fleeing. Satoshi Nakamoto's clever design separates network operation from code development, allowing both to mutually constrain and check each other. More importantly, it prevents either from forming a monopoly: open-source code gives anyone the opportunity to establish new codebases, diverting broader consensus; the entry and exit of the hash power network are completely anonymous and do not require permission, combined with the randomness of the PoW block generation mechanism, making it difficult for network nodes to monopolize operations and blockchain generation.

However, when we discuss non-PoW public chains, it becomes challenging to fully replicate BTC's no-governance model.

In simple terms, PoW is the only solution to the Byzantine problem. Once we remove PoW, we can only introduce certain governance mechanisms to compensate for the issues arising from the absence of PoW.

For example, for the Jouleverse chain using PoA (Proof-of-Authority), it is necessary to conduct authenticity and independence checks on the accounting nodes to avoid the classic Sybil attack problem.

Qualification checks inevitably raise the entry threshold and cannot be as completely permissionless as PoW. It can only be said that to ensure the highest possible degree of decentralization, the threshold for these qualification checks must be low enough, but not lower than the minimum safety limit.

As for whether such a chain can still be called a public chain, this is purely a matter of conceptual definition. There is no intention to engage in such purely conceptual debates, as it holds little significance.

Returning to the essence, there is another issue: incentives. PoW not only guarantees a very low permissionless entry threshold (the only threshold is having money to buy equipment, plus a bit of technology), but also takes on the task of distributing BTC as incentives to miners. PoA lacks this automatic incentive distribution capability, so governance work is also needed here to regularly evaluate, count, and distribute incentives based on contributions.

Company management, in a sense, involves evaluating, counting, and incentivizing. The question then becomes how to implement this in a blockchain environment, which presents a new challenge.

Simply replicating a corporate structure may lead to centralization, and centralization can result in corruption and failure, leading to single points of failure. Completely decentralizing, relying on community self-awareness and spontaneity, results in very low efficiency, to the extent that it completely loses timeliness, falling far short of the real-time incentives of PoW.

Many successful blockchain projects have adopted a combination of company (financing and management entities) and DAO (holder community) models, such as Uniswap and Aave. Even Ethereum, with the Ethereum Foundation as its main driving organization, is essentially a centralized company. However, this may not be suitable for public chain projects that require a higher degree of decentralization.

Perhaps it is necessary to combine top-level decentralized governance with organizational management borrowed from corporate structures. For example, establishing a board of directors at the top, but the board is not granted decision-making power based on investment amounts and share ratios as in a corporate structure; instead, it is elected by community votes. Below the board, the CEO and senior executives appointed by the board still use corporate organizational management methods, setting positions and people, assessing and incentivizing, as this structure is easiest for most workers trained in modern corporate systems to understand, preventing them from falling into confusion about who they are, what they should do, and what results they can expect from their actions.

Such a blockchain company could perhaps be called a DAO or something else. However, practice always precedes theory. The governance forms suitable for blockchain are still on the path of exploration, with a long way to go.

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