Juno’s Proposition 16 vote is a turning point for blockchain governance – for better or worse
For perhaps the first time a blockchain community has officially voted to confiscate a user’s funds.
Proposal 16, a governance proposal on the Cosmosbased on the Juno blockchain, went through the chain’s token-vote governance system. Proposal signals community approval to reduce balance of JUNO tokens held by a “whale,” or large holder, accused of manipulating the Juno launch airdrop adopted in october. The plan is extremely remarkable as it appears to mark the first major case of on-chain governance used to change a user’s token balance.
The vote initially looked likely to pass with a strong majority as it was widely seen as fixing something akin to theft. But in recent days, various actors and developers have publicly expressed their opposition out of fear, such a decision would harm the perceived reliability of the rules-based system, or its “immutability”.
The whale accused of manipulating the airdrop (a sort of crypto giveaway), meanwhile, presented itself as an investment group rather than an individual in statements defend his behavior before the vote. In part, the whale argued that the splitting of the wallet that appeared to be a “game” of the airdrop was actually intended to serve its customers. The whale said it considers the funds dropped to rightfully belong to those clients. These claims were met with significant skepticism, but may have prompted some to vote against the proposal.
the Proposal 16 votes by Juno holders was finally very close. The final vote count was 40.85% yes, 33.76% no, 3.59% no with veto and 21.79% abstention. (“No With Veto” is a voting option on Cosmos systems that signals that the proposal itself is harmful and may result in penalties for the applicant.)
The proximity of the vote is likely to heighten tension as the Juno community prepares to implement the edict, just as an official elected by a narrow margin has no “mandate to govern.” This is a problem because, first, Prop. 16 was what is sometimes called a “signposting proposal”, and a later proposal will be needed to describe the specific implementation of the ruling. (The Juno Whale tokens are currently locked and should not be able to move to dodge the haircut.)
This implementation will not be without friction. Different on-chain governance systems allow different settings to be changed automatically by vote. Juno, and most similar systems based on the open-source Tendermint software, allow automated changes to system settings for future shows, but not changing current balances.
The difficulty with hard forks
Instead, implementing Proposition 16 would require a hard fork, or backward-incompatible code change, to Juno. This would involve taking a “snapshot” of the state of the chain (how many tokens each address had at any given time), changing the balance of the whale, and restarting the chain. It’s essentially the same process that followed the huge 2016 DAO hack on Ethereum, although this fork was led by the founders of Ethereum, without a chain process.
“If someone [hypothetically] passed a signaling proposal that all coins must be transferred to a wallet, forcing everyone to back it on-chain… [u]Unless validators voluntarily coordinate on the hard fork, this still won’t happen,” according to Tor Bair, founder of the Cosmos-based company. privacy network secret.
There is an additional complication to doing a hard fork rather than an automated parameter change. Validators, the equivalent of Bitcoin miners on Cosmos and other proof-of-stake systems, could choose to continue monitoring transactions for the original chain, as with any blockchain hard fork. But there would likely be few users left on that chain, especially after a relatively small project like Juno was forked, making the choice to continue the original chain financially risky for validators.
Finally, the vote may have highlighted a possible governance-based attack vector that hadn’t been widely considered. The Juno airdrop rules were first published in August, but according to archived versions of the page a provision limiting airdrop to one instance “per person or entity” was added at an unknown later date.
This clause was used to rally support for Proposition 16, as it would mean the airdrop player violated not only the spirit of the process, but also the clear letter of the rules. Yet, depending on when the “person or entity” clause was added, the argument begins to look misleading.
The complexity of it all, however, can distract from a fundamental truth of blockchain systems. Chain voting systems can provide a layer of communication, coordination, and formality, but in the end, the mechanism for making very big changes remains essentially the same. When a group of dissident bitcoiners cloned Bitcoin and increased the block size to create bitcoin cashthey were basically vote with your feet. Few blockchain systems have effective means of prevent such forkswhether they are used to change an operating parameter or to extort money from someone.
“There is always a risk of immutability,” says Bair. “It’s a tough fork, at the end of the day.”
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.