cycle_dao Governance & Ecosystem Perspective

Arthur Falls
Arthur Falls

It’s high time we posted an article describing how cycle_dao operates, it's governance philosophy, and its views on the Internet Computer ecosystem. So, in broad strokes, here that is.

What is cycle_dao and What Does it Do?

In its simplest function, cycle_dao aims to understand the needs of the Internet Computer community and reflect those needs to the NNS governance system. Auxiliary functions include community support, NNS proposal development and submission, and public education.

We define community as IC developers & entrepreneurs, enthusiasts, ICP token holders, members of the DFINITY Foundation, users of applications hosted on the IC, and node providers.

We attempt to understand community needs through open surveys and direct engagement with individuals representing a cross-section of these different groups. We also participate in the DFINITY Developer Forum discussions related to governance proposals.

Voting & Deliberation

As a team, cycle_dao functions as a loose council. On this council are representatives from each of the main community groups with the exception of node providers & DFINITY Foundation members (these are incidental, rather than deliberate omissions). When a motion proposal is to be submitted to the NNS, we review indicators of community sentiment, discuss our own perspectives, and then vote accordingly. While there are often differing opinions within cycle_dao, it has hitherto been very clear the direction the DAO must vote on all proposals. The DAO does not aim to have a strong opinion of its own. It must reflect the desires of the community as a whole, though sometimes this takes some interpretation. 

While the correct decision for the DAO to make has been clear thus far, making this determination is not always effortless. The DFINITY Forum, the dominant arena where proposal discussion takes place, is heavily developer-oriented. Little of the discussion spills out into the Twitterverse where the bulk of the community can participate in open debate.

The situation is further complicated by the unclear opportunity cost of proposals: Currently, the DFINITY Foundation is the sole Internet Computer protocol contributor and as such, the engineering resources available to advance the protocol are limited. This means every time a proposal is accepted, other as yet unsubmitted proposals are delayed.  Currently, there is no publicly available information on the development capacity of the DFINITY Foundation, and proposals from the Foundation do not indicate expected resource consumption or time frames. Another issue is the lack of clarity around how the Foundation identifies desirable features and prioritises resource allocation. According to all indicators, transparency is the greatest single issue facing the Internet Computer today. More on this soon.

Choosing whether to adopt or reject a proposal often requires a combination of practical consideration, community consultation, and divination of opportunity cost. This was most evident in the cycle_dao vote against the People Parties proposal. Individually, most if not all cycle_dao members had expected to accept the proposal. However, during deliberation, the point was raised that the community places much more weight on the importance of EVM-based computing on the Internet Computer. At this stage, there is no EVM computing proposal under discussion on the forums. Thus we can see an unconscious misprioritisation taking place. 

[Note: cycle_dao members tend to view the People Parties feature as an excellent addition to the protocol. No cycle_dao member currently has the capacity to put forward a comprehensive proposal to enable EVM computing on the IC. This latter subject will definitely be examined in the near future, however.]

The Neuron

cycle_dao uses to control a neuron. You can set your neurons to follow cycle_dao by:

  1. Logging into your NNS

  2. Clicking a neuron

  3. Click Edit followees

  4. Click “All Topics”

  5. Click “Add Followee”

  6. Paste the address of the cycle_dao neuron in the “Neuron ID” field: 5967494994762486275

  7. Click follow Neuron

  8. Click the X next to the Internet Computer Association or any other default followee.

All done! Now you follow us. cycle_dao in turn follows the ICA for things like exchange rate and subnet management proposals. It is only the major governance proposals we elect to vote on ourselves. Because we follow the ICA, there is no chance that cycle_dao will fail to vote on any proposal.

Very soon there will be a proposal to overhaul to the way that the NNS manages proposal reward weighting and default neuron followees. Currently, cycle_dao plans to support this proposal. These instructions should still serve as an orientation to the system. (Until a planned UI overhaul is implemented)

General Views of cycle_dao

So how do the members of cycle_dao think about things? In a word, pragmatically. Most considerations revolve around decentralisation (as a catch-all for stability, robustness, censorship resistance, and representativeness) and feature prioritisation. This not only of the protocol itself but also of the components that make up the ecosystem as a whole. So far as we are able we will aim to guide the IC ecosystem as a whole in a universally beneficial direction.

Hardware & Network

There are 451 nodes plugged into the Internet computer, hosting 27 subnets with a further 890 nodes waiting to be onboarded. Waiting? Well, the requisite tooling for node providers to submit a proposal to join the IC and then self onboard is still in production. As is the development of a new hardware specification that includes secure enclave technology to enhance security. We would like to see a diversity of hardware running on different subnet types as well as greater autonomy on the part of node providers. However, things are moving in the right direction.

Financial Decentralisation/Representativeness

The decentralisation of ICP holdership is complicated:

The Messari report serves as a broad-strokes map of initial token distribution and indicates about one thousand significant private ICP holders. As a comparison, in the case of Ethereum’s genesis, we know there were over 6600 initial wallets from bitcoin contributors. Many of these likely represent the same contributor with one or more contributors believed to have held 10%+ of ether supply at genesis. There are not such large holders of ICP with the only opportunity for mass acquisition the seed round.

We can see 2MM ICP dissolving out of the NNS per month on average since genesis with this projected to increase to 4MM next year. Presuming these new ICP entering circulation are sold, this does represent a strong trend toward decentralisation of the ICP holder base with over 200MM ICP set to dissolve and enter the market over the next 4 years.

The above represents initial conditions and observed ICP holder behavior. However, it is worth mentioning that the economics of the NNS are fundamentally centralising, paying returns in ICP to those who lock their principal ICP balance for an extended duration. There are no ongoing expenses associated with this activity. Contrast this with Ethereum or Bitcoin, both Proof of Work systems. In the case of PoW, miners have to sell mined coins to pay their operating costs. This decentralises token ownership. For ICP there is no such built-in pressure. 

All this is to say that for the Internet Computer, decentralisation of the financial stakeholder base is a complicated subject. These economics were part of our objection to the unsubmitted proposal to Change Dissolve Delay Bonus and Age Bonus Parameters. A subsequent motion proposal to reassess and submit this proposal in 6 months time was adopted on 2021/11/30.

Governance Venue & Culture

Already raised above was the issue of proposal debate taking place on the DFINITY Developer Forums and not leaking out into the community through more trafficked venues like Twitter. The forums have become a central location in NNS governance that may be targeted by trolls, DOS attacks, or suffer cultural takeover.

This sounds alarming but in a practical sense, it is not necessarily a significant issue. There must always be a central debating chamber subject to these threats and ultimately, the power to accept or reject proposals remains in the hands of the NNS voters. Involved parties are incentivised to engage the broader voting community. Through publishing opinions on the cycle_dao blog and tweeting those opinions we hope to play a role in bridging the audience gap.

In the event that something went wrong with the forums technically, an alternative venue could be adopted. Cultural issues are more significant. It must be pointed out that the entirety of the DFINITY Developer Forum discussion is in English and limited engagement from the massive Chinese community has been detected by us (don't take this assertion as gospel). As such, it is already fair to diagnose cultural dominance - Something that should be acknowledged and addressed somehow. We are open to ideas :)
A different type of cultural takeover occurred in the case of Bitcointalk. Toxicity and factionalism eventually boiled over with the SegWit controversy and resulted in a season of Bitcoin forks. In the case of the IC, NNS voters would decide the path forward leaving the dissenting element the option to conform or exit. Thus, low threat to the stability of the protocol. Still worth thinking about. 

This latter “exit” scenario made the ICPReboot fork an exciting decentralising opportunity in the eyes of some in cycle_dao. A fork could serve as a release valve for elements of the community with minority opinions. However, ICPR does not appear to be moving forward, with no funds sent to their fundraising addresses (ouch!) and no indication of technical progress. Given the vitriol of their Medium posts and generally token-oriented communications, sadly, ICPR increasingly looks like a scam or elaborate FUD campaign (this perspective could be wrong and it does appear that genuine, good-hearted community members are involved in ICPR).

Given a state/protocol fork as seen in other blockchains is impossible for the IC, there are differing views within cycle_dao about whether a "fork" is feasible. It will take a very serious team. This is a serious reality. It can't be over stated.

Protocol Development & Support

Currently, and for the foreseeable future, the DFINITY Foundation is and will be the sole contributor to the Internet Computer Protocol. Network support has been assigned to a new organisation, the Internet Computer Association. This is a positive step but to outsiders, and even insiders, the division is unclear. Ideally, cycle_dao would like to see the miners themselves take over the operation of the ICA, and this appears to have been the goal of the DFINITY Foundation itself. However, the process through which this will occur is so far unclear and the ICA website is not being updated.

A hoped-for benefit of ICPR was another team building and testing IC protocol code. While DFINITY has completely open-sourced the Internet Computer Protocol, we now need capable engineers to comb through the code, find bugs, and begin the process of decentralising protocol development. Again, as with the takeover of the ICA, it is unclear how this will occur without bug bounties and other incentives for the open-source community.

Ecosystem Funding

The Developer grants program has been a raging success, one the community awards program aims to replicate. However, both of these programs are led by DFINITY. On the investment side, Toniq Labs, InfinitySwap, ICME, DFinance, and many others have been successful in raising funds from both angel investors and VCs. It would be great to see some community efforts systematised into investment DAOs and a pathway for smaller bagholders to participate. This is one goal of the Service Nervous System , however, this appears to be a ways off.

Conclusion & The Future

cycle_dao member Harrison Hines once described the Internet Computer as a “greenfields” opportunity. As the technology has been tested and worn-in over the months since launch, we can see what features are needed to move forward on the protocol front. Now we all need to turn our attention to the community. 

The team over at DFINITY Community are already performing great work as a fledgling media arm. The folks at Toniq Labs are driving excitement and community engagement. DFINITY has the community awards program coming up, and cycle_dao is working on putting ecosystem investment opportunities in front of seed-round and other large token holders (please be in touch if this is you). We would also like to see a seed-round oriented DAO for governance, and a community-led investment DAO.

How many hours are there in a day again? Fewer than normal it seems with the increasing number of NNS proposals up for consideration and a massive rush forecasted in the next few weeks. 

These are busy times, and they will only get busier. Thanks for taking interest in what we are working on over here at cycle_dao. Please tweet @cycle_dao if you have anything you’d like to bring to our attention. Representing & supporting you is what we are here for.

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