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Obviously, the Humanode network relies on the activity of its Governors. Besides building the technological solutions stated in this paper, the Humanode core will promote full transparency of governing processes and transactions, design and deploy decentralized governing processes, participate heavily in the Humanode community, and make development proposals. The Proposal Pool System– Vortex–Formation governance stack was designed by the Humanode core to create a hybrid Proof-of-Time/Proof-of-Devotion/Proof-of-Human-Existence safeguarded network. This implementation allows us to lower the influence of the problems that affect any system that tries to integrate democratic procedures:
- 1.Voter apathy is a very widespread problem that entangles every single voting system. The biggest part of this problem is the inability to reach a quorum. The Humanode network demands governance participation in proposals and voting from Governors and proof of existence from all human nodes. Those Governors who do not fulfill monthly governing conditions (either they did not make proposals or did not vote on any proposal) are automatically converted to non-governing. Quorum is reached if 33% of Governors vote upon a proposal, so it means that only voices of those who actively participate in governance are calculated to reach a quorum.
- 2.Masses are often mistaken. It is common sense that a small, dedicated group of professionals with years of experience would be able to give a more precise and correct opinion on a particular voting matter than a mass of people with different backgrounds and education. To balance the democratic approach with professional education and experience, Humanode core came up with a hybrid Proof-of-Time/Proof-of-Dedication governance system named "Vortex", in which Governors have different tiers. They can be promoted in tiers if certain requirements are met. This way the protocol gives more tools and proposal rights to those who have more experience and have proven their devotion through Formation. The necessity to have your proposal approved before becoming a governor acts as a proof-of-devotion step that uplifts the quality of governors and acts as an important layer of defense against Sybil attacks.
- 3.Inability to directly delegate your vote to any other voter in a system creates many different forms of how the voting procedures take place. The very systems of how electoral delegates are chosen have loopholes that allow political tricks such as gerrymandering and filibustering. Governing human nodes are designed to be equal in voting power; at the same time the voting mechanisms allow you to delegate your vote to any other human node without boundaries. A Governor's voting power equals 1 + amount of delegations he has.
As we try to balance freedom with safety and quality we were faced with two options: to either be a centralized company that does everything on its own until it is working optimally or decentralizing it and building on a devoted community. The first approach surely has its advantages in terms of coordination and speed, but it is authoritarian, and Humanode is not. But if we chose the second option, the Humanode network would be at a larger risk, as it is going to be quite small at first. So to solve this dilemma, instead of choosing one out of the two approaches we came up with a third solution. We decided that all members of Humanode core will receive a Consul tier at the deployment phase so that we as founders and developers would have the ability to lead a more centralized approach in governance at first. Decentralization is guaranteed because of two reasons: 1) In four years other Consuls will emerge; 2) Any decision still has to be voted upon by the governors. This way we can concentrate on development and deliver everything that we laid out in this paper, but at the same time, the protocol guarantees that the system itself will definitely become more and more decentralized and the Humanode core's weight will be diluted. Another authoritarian point is that in the first four years of Humanode’s existence proposals that require grants from Formation must be voted upon by 66% of the Consuls to be approved. This precaution is taken to defend the Formation vault from many angles of attacks that persist in decentralized permissionless public networks.
"Who says organization, says oligarchy."
"Historical evolution mocks all the prophylactic measures that have been adopted for the prevention of oligarchy.”
- Robert Michels
This hypothesis was developed by the German sociologist Robert Michels in his 1911 book, ‘Political Parties.’ It states that any organizational form inevitably leads to oligarchy as an ‘iron law’. Michels researched the fact that large and complex organizations cannot function efficiently if they are governed through direct democracy. Because of this, power within such organizations is always delegated to a group of individuals.
In Michels’s understanding, any organization eventually is run by a class of leaders regardless of their morals or political stance. Monarchies and republics, democracies and autocracies, political parties, labor unions, and corporations, etc. have a nobility class, administrators, executives, spokespersons, or political strategists. Michels stated that only rarely do representatives of these classes really act as servants of the people. In most cases, people become pawns in never-ending games of power balancing, networking, and survival. Regardless of the inception principles, the ruling class will always emerge and in time it will inevitably grow to dominate the organization's power structures. The consolidation of power occurs for many different reasons, but one of the most common ways is through controlling access to information.
Michels argues that any decentralized attempts to verify the credibility of leadership are predetermined to fail, as power gives different tools to control and corrupt any process of verification. Many different mechanisms allow serious influence on the outcome of democratically made decisions like the media. Michels stated that the official goal of representative democracy of eliminating elite rule was impossible, that representative democracy is a façade legitimizing the rule of a particular elite, and that elite rule, which he refers to as oligarchy, is inevitable (J. L. Hyland, 1995, p. 247).
This law is directly applied to modern elites. The financial network is always a complex multi-layer construct that requires a great deal of administrative and organizational power. According to Michels, such a system would inevitably become oligarchic. While designing the basic principles of the Humanode network and Vortex, the Humanode core was faced with a challenge to find a delicate balance between organizational efficiency and the democratic involvement of the masses. We believe that a combination of voting power equality, unbiased intellectual barriers, direct delegation, Proof-of-Time, Proof-of-Dedication, and Proof-of-Human existence would make a very balanced and just system, but it will not solve the problem of ‘Iron Oligarchy,’ as a leadership class will definitely emerge.
Fiat credit-cycle systems have large financial entities, PoW networks are faced with miner cartels, PoS systems have validator oligopolies, and Humanode has Consuls and research groups. Governors have different proposal rights based on different tiers. Consuls have absolute freedom in proposal creation as they can put forth an idea of any type and they wield a right to veto any decision that is approved by Vortex twice. Legate and Consul freedom of authority is balanced out by the voting mechanism that requires a quorum and an absolute majority of those voting for a proposal to be approved. As the absolute majority of Governors is required for a decision to be approved it negates the ability of Legates and Consuls to approve something against the will of the majority of voters.
In a perfect world where all participants of the network actively govern, this balancing effort should be just enough to minimize the influence of any type of oligopoly that might emerge in the Humanode network, but we do not live in a perfect world. Apathy of voters is a scourge to most of the voting systems that exist and creates the necessity of vote delegation, which has its own advantages and disadvantages.
Problems of vote delegation have always accompanied any large democratic system. The core problem of democracies in their purest form is that they are very vulnerable to the Byzantine Generals Problem (BGP). Any system has a critical point of failure. Large systems tend to have several or dozens. Because of this, any democratic system requires institutions built on top to protect those critical points. These institutions limit the direct voting of the masses on crucial matters. There are four main reasons why these limitations are a necessity.
- 1.Strategic resources, critical points, and stability. Any system has a sensitive part. For example, some countries wield nuclear arsenals and have democratic political systems. The vote on the deployment of nuclear weaponry is commonly restricted to a very small group of individuals. It makes sense that such an important spectrum would be heavily guarded against any angle of attack, especially BGP. That is why this part of the system requires consolidation of power, and an autocratic approach in decision-making. Besides weapons of mass destruction (WMDs) there are financial, energetic, military, trading, diplomatic, intelligence, etc. chokepoints that unless safeguarded can be used by the enemies of that system to cause catastrophic events and lead to destabilization. Natural autocracy rises in the chokepoints of strategic value.
- 2.Apathy of voters and effectiveness. Lack of caring among voters in voting procedures can lead to a halt in governance, as most voting requires some kind of a quorum. If apathy is strong enough to stop a quorum from being raised then the governance process stops until a quorum is reached. Some operations and decisions require the constant active involvement of voters, which is where delegation comes in hand. Ordinary people do not want or have time to participate in governance, which is why in representative democracies citizens can cast their vote to elect representatives that are actively involved in decision-making. The fewer people participate in voting, the easier it is to coordinate.
- 3.Technological limitations. Before the digital era, there was no effective way to conduct voting procedures, as communications were not as developed as they are now. Without proper confirmation of identity and support of modern tech, it was hard to imagine a way to conduct large direct voting without putting strain on administrative resources. Delegating to a politically active person negates the necessity to use sophisticated technologies to conduct legislative procedures.
- 4.Misrepresentation. In most democracies your vote is restricted by the region you are geographically located in, meaning that you can cast a vote for a nominee tied to your constituency, but he might not get elected, meaning that your vote was practically burned and a person that you did not vote for might be representing you. Most governing systems lack the freedom of vote delegation, as you cannot directly delegate your voice to a particular person.
While devising the voting procedures for Vortex, the Humanode core has kept in mind the principles mentioned above. The Governor tier system safeguards critical points by limiting the abilities of the electorate to create proposals but at the same time, the autocratic chokepoint is balanced out by requiring a quorum of Governors to approve created proposals. The influence of apathy of voters is limited by demanding voting activity from human nodes to be counted as Governors. This way only active participants of the network are counted in reaching a quorum. The technological progress in decentralized autonomous organization deployment and biometric processing in the last decade has brought forward a way to overcome the obstacles of the past connected to direct voting procedures and the uniqueness of voters. Delegation of voting power is permissionless meaning that any human-node can delegate its vote to any Governor in the Humanode network. We acknowledge that even with modern approaches to voting and technological breakthroughs, a delegation mechanism in the Humanode network is a natural necessity.
The digital revolution has paved the way for technologies that allow us to create systems with liquid representative democracies. Compared to traditional representative democracies, a voter can re-cast his vote any time he wants, without the necessity to wait for years to do it again. Vote delegation can be changed anytime. Delegated Proof-of-Stake (DPoS) protocols implemented liquid democracy for delegating transaction validation operations to professional entities. As the validators are safeguarding the protocol and receive a commission for their operation, the voter's choice is usually driven by economic incentives: how commission size, uptime, and security of the delegate's server might reflect on voter's earnings. Is that enough to choose an opinion representative in a decentralized network? Most DPoS networks have a strict unbounding period that can last up to two weeks or even months. This measure is a necessity to safeguard from manipulated panic-based market crashes where delegators undelegate their tokens and sell them in fear of losing value. In the Humanode network, voting power is not entangled with a token, which is why there is no need for unbounding periods. Any time a human-node wishes to re-cast or simply retrace its delegation it can be done instantly.
It is commonly acknowledged that any voting system is faced with populism. Hypothetically there are two major approaches to how populism is perceived:
- Populism poses a threat to democratic stability. According to recent studies, conducted by Jordan Kyle and Yascha Mounk of the Tony Blair Institute for Global Change, one of the key findings they have had is that Populists are far more likely to damage democracy. Overall, 23 percent of populists cause significant democratic backsliding, compared with 6 percent of non-populist democratically elected leaders (J. Kyle & Y. Mounk, 2018). In other words, populist governments are about four times more likely than non-populist ones to harm democratic institutions.
- Populism is a necessary corrective mechanism that addresses popular problems and limits the power of elites.
Regardless of which view is more accurate, populism is acknowledged to be a very powerful tool to gather the support of the masses in democratic systems. The main danger perceived by the Humanode core is the rise of populists. Individuals that know how to be popular do not necessarily have the intelligence, professional qualities, experience, or profound knowledge on the subjects they have to make decisions upon on a regular basis.
In the Humanode network, every human node has a voting power of 1. Voting delegation in Humanode allows for any human node to delegate their voting power to any governor in the network. Governor power equals 1 + the amount of delegations from other human nodes. Such a system allows limitless crowdsourcing possibilities as delegation is liquid and not regionally bound. As in any other democratic system, individuals that possess oratory, diplomatic skills and are backed by influential media sources have an advantage in the Humanode network. An introvert with sociopathic tendencies possessing a very professional skill set for decision-making operations will most likely receive less support than a good negotiator, orator, and crowd controller that possesses a mediocre skill set. It’s slightly balanced out by the fact that human nodes must have an accepted proposal before they become governors. Thus governors should be less affected by populist media as they have a confirmed intellectual skill set that allowed them to create a useful proposal accepted by the governors of Humanode.
In Vortex voting procedures, Governors have disproportionate voting power and those governors that have more delegations have more power. The professional backslide in our understanding poses a threat to the effectiveness, progressiveness, and constant optimization of governance. We fear that without Proof-of-Devotion, which is in a way a proof of having some kind of professional skill set, any democratic system faces becoming a plutocracy, where the wealthiest members control influential and credible media sources to direct the opinion of masses and drive support to candidates of their choosing.
Proof-of-Devotion might bring a small balance to populism upheaval, as it demands participation in Formation to receive proposal rights on critical matters. Nevertheless, consuls wielding huge delegations will inevitably emerge and their stance in decision-making mechanisms will be very strong. The only way to limit their influence is direct and active participation of human nodes in governing processes. The more governors that do not delegate their vote and actively participate in governance the less authority can be accumulated in the hands of those that seek it.