Noether is a proof-of-stake (PoS) system comprised of three main components: staking smart contracts, a selection algorithm, and node software.
Staking Smart Contract: This component handles the deposit and withdrawal mechanisms for CTSI.
Selection Algorithm: The selection algorithm efficiently and randomly selects a staker based on their staked amount. Importantly, it operates in a manner that reduces fees and race conditions on the Ethereum network. The probability of a user being selected is proportional to the number of tokens they have staked. Selection happens on average every t seconds, where t is the window of time chosen during deployment.
Noether Node: The Noether Node (not to be confused with the Cartesi Node), is an off-chain software component that continuously monitors the blockchain. When it detects that the user running it has been selected by the algorithm, it automatically takes the appropriate actions (whichever they are).
Noether also features a Delegated Staking implementation. In this system, users can delegate their stake to another agent (typically for a fee). The agent can then use the delegated tokens to increase their chances of being selected in the PoS system.
For further details on the selection algorithm/Noether, please refer to this link.
The idea of this proposal is exploring Noether as a partial solution for decentralized governance incentivization. However, let’s be clear: this proposal is still in the exploratory phase. While I believe there is merit in considering Noether for this purpose, I am also keenly aware of the complexities and nuances that come with such a system. The idea of publicizing this is to invite feedback and collaboration from the community, so we delve deeper into the challenge of assessing its feasibility together.
Decentralized governance is a fascinating field with its fair share of challenges. The essence of coordinating humans isn’t really a solved problem (or even solvable?). I don’t plan on enumerating all the challenges decentralized governance faces, there are far too many. Thankfully, there is a plethora of cool experiments going on and some brilliant minds working on it. There’s at least a little hope on the horizon.
I hope, in this proposal, to entertain the thought of fixing one of these problems using the infrastructure already available in our ecosystem.
Participating in the governance of decentralized projects can be daunting. Many protocols, including Cartesi, are intricate and require specialized knowledge spanning multiple domains. At the same time, the majority of users possess only a minuscule fraction of the total voting power. Given the steep learning curve and their negligible weight in decisions, it’s unsurprising that many would opt for apathy over participation. For this, the fairly well accepted solution: representative democracy.
Rather than each individual casting their vote on every issue, they delegate their voting power to chosen representatives. These delegates become the voice of their delegators. By narrowing down the active participants, educational efforts and debates can be more focused and efficient.
Expertise, not populism: Elected representatives can dedicate themselves to develop the skills and expertise necessary to make informed decisions. They’re expected to be way more knowledgeable and tuned in than the average user.
Attention Economics: Not everyone has the time or inclination to immerse themselves in politics. Delegated voting relieves the normal users of constant decision-making. They simply choose who they trust to make those decisions on their behalf.
No idea how to name this one: A buffer between direct decision-making and citizens leads to more balanced outcomes. Decisions tend to be more geared towards the collective good, rather than subjective desires. It is said to mitigate the risks of a tyranny of the majority, but that seems to me more like a feature of a healthy democracy than a voting system hehe.
A side-note: haters of representative democracy argue it can distance everyday people from governance, making them nothing but periodic apathetic voters. Here, in the blockchain world, we have a unique advantage (yay): if a delegate doesn’t act in your interest, you’re not bound until the next election cycle to effect a change. You can promptly shit-talk the delegate on twitter and undelegate your tokens, ensuring immediate accountability.
Delegates, in many protocols, aren’t financially compensated for their contributions. Relying on altruistic governance isn’t scalable or sustainable. As the complexity and stakes of decisions grow, the effort necessary to participate increases. For any decent governance system, we need dedicated, skilled individuals participating. Their commitment ought to be incentivized – and the straightforward way to achieve this is to ensure they’re fairly compensated for their pivotal role.
(aka adding it all together)
Noether enables token delegation and proportionally rewards delegates based on the tokens entrusted to them. Which is another way of saying that it compensates representatives in alignment with the trust they’ve garnered within the community. This dynamic seems like a good seed for evolving into a decentralized representative democracy where financial compensation correlates directly with the number of people one represents.
Noether’s protocol would function in a permissionless way. It recalibrates compensation in real-time, reflecting the stakers’ decisions. If a delegate’s actions are not aligned with the community’s expectations, stakes would automatically get redistributed, which effectively results in a pay cut for the delegate.
This brings us to the heart of the proposal: using Noether as a dynamic, permissionless governance incentivization mechanism that auto-adjusts delegate compensation based on voter support.
- Shared Rewards: Stakers benefit from the rewards earned through their delegate’s activity. This encourages stakers to actively support and promote the representative they trust.
- Dynamic Compensation: Payment is not only permissionless but also adaptable, adjusting in real-time to the delegate’s activity.
- Staking Timelines: There’s a defined period for withdrawing staked tokens. This ensures both stakers and delegates are incentivized to champion the project’s best interests. A sudden purchase of tokens for malevolent purposes would devalue before any withdrawal, safeguarding the system’s integrity.
- Distribution Ratio: Currently, node runners (delegates) decide the reward ratio between themselves and their stakers. This flexibility might skew incentives, with stakers possibly choosing delegates for short-term financial gains rather than sound decision-making. It’s basically a vote-buying mechanism baked in the protocol. Should this ratio be standardized to maintain balanced incentives?
- Proof of Voting: Should delegates offer tangible on-chain evidence of their voting? Or, should compensation continue irrespective of visible “activity”, trusting stakers to observe and shift their votes if needed? Whatever the solution, any frontend should prioritize listings based on delegates actual activity.
- Payment source: Staking rewards are funded from the original “mine reserve,” of which around 60% currently remains… When that money is over, how do we finance this? Do we turn to inflation to keep the wheels turning?
- Privacy concerns: how do we make delegation private? Can we add liquid delegating too? Etc etc
So, while this concept is still immature, it is a possibility for a bold experiment that can play a relevant part in our decentralized governance. What do you all think? I’m sharing this with the community to get feedback/discussion going. I’m sure there are more challenges and considerations yet to surface, and a collective brainstorm is the way forward.
Hope you enjoyed the read! And please offer unfiltered feedback, I’m not emotionally tied to this idea :).