Tendermint Byzantine fault tolerance has been a revolutionary step forward in the decentralization of money and finance by the simple nature that it allowed more participation than just proof of work ledgers. Cosmos changed history upon genesis, but we still have a long way to go to manifest further decentralization, as well as proper incentive structures for stake holders. There is a veneer of decentralization among the Cosmos Hub, as 15 validators control the deterministic outcome for stake holders. All though we cannot discount the revolutionary aspects of Cosmos, we also cannot accept stagflation of virtues which act as pillars to the ethos of the crypto currency ecosystem. The quest to further decentralize the ledger and bring incentives for stake holders has just begun.
Governance centralization through the validator monopoly
There is growing disdain among the Cosmos about the centralization of governance. Cosmos stake holders should be forward thinking and see what the SEC is hinting at by targeting large stake pools run by centralized exchanges, such as Coinbase and Kraken. A large validator with majority stake is no different from an exchange, at the end of the day transactions are being processed. This set up emulates bloatware which reduces positive incentives for stake holders, the life and blood of the ledger. Validators are the only sovereign in the Cosmos, they get to control chains without holding any tokens. Those without stake, control the outcome of stakeholders. A capital structure which has led to lopsided incentives, validators not owning tokens reinforces the argument of ATOM being a security as their work directly benefits tokenholders.
Incentives are broken
Ledgers are not just analog technological slacks, they are socio-technological slacks, which must have the proper incentives to create human behavior that is positive for the economic system and stake holders. As discussed above, validators have increasingly centralized control over the determinism of the entire Cosmos ecosystem, by artifact of their ability to control governance. No one can verify if the validators determinism is aligned with Atom stake holders. Often, validators do not even hold Atoms and are thus gamified into soft power attacks against the network via anti antithetical incentives created by other networks which utilize the Atom infrastructure. This is dysfunctional, and forces validators to engage in politics and soft civil wars vs providing productive capital for the network, such as infrastructure. This set up also incentives bad actors, who prefer to engage in populism, vs empiricist who prefer to build and fine tune their software, coding, and engineering skills.
Community pool is getting pillaged, the unsustainable plenty.
The ICF rejected its initial mandate and its now directing all teams that it was supposed to fund via the community pool. Funds are getting disbursed with no accountability, paid upfront and without check and balances or ability to stop the initiative. Is the role of the hub to fund common infrastructure, without asking for anything in return? Are these 15 validators meeting and having steak dinners together and deciding how to pillage the highest amount? One favor for another favor. We do not think validators are better at governance then developers or Atom stake holders. Since the beginning of the year, stake holders are getting close to 1m ATOM worth of demands from various entities. There is no accountability or oversight; “just “send ‘x’ amount to this multisig and we promise to provide services”.
The following items summarize the voting options and what it means for this proposal:
YES - If you think the cosmos hub should re evaluate the role of validators in governance
NO - if you think the hub governance is fine as is
NO WITH VETO - A ‘NoWithVeto’ vote indicates a proposal either (1) is deemed to be spam, i.e., irrelevant to Cosmos Hub, (2) disproportionately infringes on minority interests, or (3) violates or encourages violation of the rules of engagement as currently set out by Cosmos Hub governance. If the number of ‘NoWithVeto’ votes is greater than a third of total votes, the proposal is rejected and the deposits are burned.
ABSTAIN - You wish to contribute to quorum but you formally decline to vote either for or against the proposal.