EOSREAL Comments on Governance Proposal by EOS NY

From the very beginning before the EOS Main-net launch, EOSREAL is one of the very few Block Producers who are dedicated to EOS governance. Leveraging our multicultural backgrounds and expertise in different fields (compliance, psychology, finance/economics, international affairs, etc.), we take every effort to optimize EOS governance mechanism and reaching community consensus.

As a reply to our friend’s incredible trial, EOSREAL would like to provide our feedbacks/opinions for public review and consideration. We now also encourage anyone who cares about long-term interests in EOS to participate as well. The discussion is the road one must follow that leads to community agreement.

EOSREAL comments here do not touch the part of arbitrators as we believe it a much bigger topic to discuss and we will open a different thread to talk about it very soon. All of the following comments by EOSREAL is under the assumption that the arbitration system would be still there.

EOSREAL Comment: We think this change is meaningful and necessary, as there have been many versions of translation of the word Constitution since some people have concerns about its specific usage, which have confused non-English-speaking community. EOS User Agreement is a more direct and appropriate noun for the document.

p.s. There may be a typo of the word Foreward? Should it be Foreword?

EOSREAL Comment: We highly appreciate this efforts to call for public revision and community agreement before submission for referendum!

EOSREAL Comment: We understand the consideration behind this principle; however, everything has its pros and cons, especially when there are non-code elements involved such as voters and arbitrators.

To focus on the enforceability, we find that there are much more detailed statements in EUA than in the current version. It may make it less flexible to revise later when things change (as we have to pass the referendum before any change in EUA).

Moreover, to focus on enforceability, we also find that the EUA has removed many statements that are hard to enforce but show critical EOS designing spirits. Some of these deleted contents are so important that they should not be removed even if they are hard to be enforced. At least, they may serve as a reference when arbitrators make decisions. Here are two such specially important contents that we think necessary to add back again:

1) No Vote Buying

No Member shall offer nor accept anything of value in exchange for a vote of any type, nor shall any Member unduly influence the vote of another.

2) Upper Limit of Beneficial Interest

This blockchain has no owners, managers or fiduciaries; therefore, no Member shall have beneficial interest in more than 10% of the EOS token supply.

We think these two statements are critical for the decentralization of EOS as a blockchain.

EOSREAL Comment: More clarification is needed to specify the cases of indirect ownership. There seem to be some contradictions among different parts of the documents.

For example, in Definition-Ownership, indirect ownership is achieved by permissions or authorizations; However, in Article XI — No Fiduciary, it clearly states that No User can authorize anyone to…. Are the two above contradict with each other?

EOSREAL Comment: We are quite uncomfortable about this definition, as we think the rights should always belong to token holders, and therefore, the enactment, removal and execution of any User Referendum should be carried out even without the agreement of 15/21 Block Producers. Block Producers MUST initiate the User Referendum handed in, with no excuse, or they have not fulfilled their responsibility. What’s more, Block Producers are constrained by governance documents, whose modification is effective only after User Referendum. If the User Referendum process can only be enacted, removed, or otherwise put into effect in any way, by 15/21 Block Producers, how can this constraint mechanism work?

Another problem about this definition is how we decide the 21 Block Producers? As we all know, the election of Block Producers is going on continuously, and the ranking of Block Producers is changing all the time. By what point of time do we take the snapshot of ranking to decide the 21 Block Producers here?

Comment: We think there may be some problem with this Article with respect to its specification in Jurisdiction. Think about the following case: the regulator, according to the local law, asks an EOS user to do harm to EOS, or do something that goes against EUA, what should the user react? According to Article I, as the EOS blockchain is to be governed by and construed under the rules contained herein (i.e. EUA), the user should not follow the regulator’s requirement; However, according to the same Article, as users are expected to adhere to the laws of their local jurisdiction, the user should fulfill the expectation and follow the regulator’s requirement. Here we have a contradiction and dilemma.

We suggest that this jurisdiction specification part removed from EUA, as what we have in the current version, to avoid any complicated legal problem stated as above.

EOSREAL Comment: We suggest that Block Producers who have signed the regproducer Ricardian Contract will maintain the active blockchain codebase to Block Producers will maintain the active blockchain codebase. It is redundant as all the Block Producers HAVE TO sign the regproducer before they are qualified. It is actually stated in Article II.

Another problem comes to the part main the active blockchain codebase. How can we quantify the activeness and how can we enforce this requirement. If the whole documents emphasize the spirit of enforceability, should it be removed?

What’s more, since this Article is all about Block Producers, should it be moved to regproducer?

Last but not least, together with the Definition — User Referendum, we have the same problem stated above. According to Article VII, any attempt to alter the EUA or any governing document, as well as any action that may alter the current state of any tokens considered network funds, is prohibited without prior authorization obtained through a User Referendum conducted in accordance with Article VI; However, according to Definition — User Referendum, the User Referendum is carried out only when 15/21 Block Producers agree. Then, how can we make any change in the governance documents that bring social benefits while may impair the welfare of Block Producers? Block Producers can easily block such change by not voting for User Referendum.

Comment: We suggest that we switch the order of these two Articles.

EOSREAL Comment: We do not think it a good proposal. De facto, this Article X empowers part of the rights that belong to Arbitrator to Block Producers. For instance, when some account owners lose their private keys and tokens in their account, and they provide some evidence of ownership, should Block Producer take action to support their claim? How can we be sure that the proof of ownership is enough? By discretion of a single Block Producer? There may be some severe problems coming out when we allow this Article X to take effect.

We still insist that we should define a default arbitration forum for such things, or at lease, the decision should be collectively made by many Block Producers according to some agreed-on mechanism that should be specified in governance documents.

EOSREAL Comment: We suggest we remove this Article as it is redundant. It is in effect without the need of mention.

EOSREAL Comment: We pretty understand and support the good intention to add inflation parameter in EUA, but we think it brings some other considerations. If the parameter of inflation rates is to be included, all the parameters relating to the governance (such as the number of elected Block Producers, etc.) should also be specified in EUA. Is it practical to specify all such parameters in the EUA?

EOSREAL Comment: We insist on adding the following statement in the Regproducer Agreement:

Any change in the codes against governance document should NOT be executed until it is approved by User Referendum.

We find that Regproducer Agreement (originally called BP Agreement) is much shorter than the original version, cutting many detailed rules that constrict Block Producers. Some removed details are stated in EUA, others are directly removed. It may be better to enrich Regproducer, as it would be more appropriate to run a User-Referendum to change Regproducer rather than EUA, which includes rules for other roles. At least, we think that the level of detail in Regproducer should be higher than that of EUA. However, we still insist that all the governance documents should only set the most basic rules for users to follow. More specific rules and constraints can be specified by dApp developers according to their specific ecosystem.

Contact EOSREAL if you need further information:

Email: eos@eosreal.com

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