Bitcoin: Donation Auction Voting for Coin Decision-Making & Development

There are some difficulties with sustaining a coin ecosystem like Bitcoin. The first problem is that highly-skilled developers are required to maintain and upgrade blockchain software. Secondly there is no governance structure to decide on what changes are needed if needed at all. There is currently a major conflict between Bitcoin core developers and others who want to increase the current 1MB blocksize limit. Some may argue that having no governance is a core strength for a minimalist commodity coin, but what do users do about issues like the Bitcoin blocksize debate or the development of other coin ecosystems that may desire some governance process?

Donation auction voting to a coin development fund may be a way to solve both the governance and funding problem for some coin ecosystems.

Donation auction voting can be a way to enable decision-making for coin ecosystems without built-in governance. Interested participants in an ecosystem can donate coins for or against proposals to change a particular feature in the software. They can use an auction format with deadlines whereby the highest donation amount wins. It’s important to provide a sufficient amount of time before the deadline to give as many people an opportunity to participate as possible. People should be given at least a week to participate or perhaps up to a few months for very important proposals. In order to prevent last minute auction ‘sniping’ where people donate at the last second to change the outcome of a proposal, a process can be put in place to extend the auction by a certain amount of time (eg. 24hrs) whenever there is a lead change with the voting. Hence the auction can last indefinitely until one side has more stake contributions for the extension period (eg. 24hrs) after the deadline and after the latest lead change. After the donation voting is complete the amount of stake for or against a proposal is put into a coin development fund.

Bitcoin Blocksize Debate Example

If the Bitcoin community came together with an effort to use donation auction voting they would set a proposal or multiple related proposals and list them as such:

1. Implement Segwit to fix transaction malleability
2. Fix transaction malleability using another solution
3. Hard fork to implement Bitcoin Unlimited
4. Hard fork to increase Blocksize to 2MB

Most of the activity will probably start with the proposal to implement Bitcoin Unlimited, the most contentious of the four. The deadline of that proposal can be set to midnight UTC, July 31st. [Note: You can use donation vote auctions to determine the order of the votes as well.] One bitcoin donation address can be used to indicate ‘Yes’ to the proposal and another donation address to indicate ‘No’. People can start contributing immediately to either address. As we near the July 31st deadline and if the donation amounts to each address are relatively close, some parties may wait until right before the midnight deadline to donate. If the last donations before the deadline switch the support from ‘No’ to ‘Yes’ or vice versa the community could require an extension of 24hrs from precisely that time of the switch so people can continue to contribute on either side. Every time there is a switch in support the deadline can be extended an extra 24hrs. Finally when one side has the most support for more than 24hrs at or after the deadline it will be deemed the winner of the donation auction and the community can move forward with an action or non-action.

Fund Development

Auction donations will have the secondary benefit of providing funds to implement proposals as well as provide for general software maintenance and development. Some proposals for feature changes will require significant developer resources to implement so the donation amounts may not be enough, but it will be a good starting point.

In the beginning and for small ecosystems there could probably be some trusted developers to handle donations and distribute donation funds. Over time smart contracts, escrow and multi-sig systems could be put in place to make the entire funding process require much less trust. Donation auction voting can also be used to determine exactly how these upgrades and features are implemented. If an excess of money is raised than is needed for software development, donation auction voting may even be used to determine and allocate funding support for marketing and outreach activities.

Measure of Sacrifice

Donations that are committed for voting are a sacrifice. Anyone can make a comment on a message board or vote on a poll so those are not good measures of sacrifice, nor are they good measures of loyalty or stake. Stakeweighted voting is great, but donations require a greater sacrifice.

Attacks

One can imagine outsiders with money that may want to disrupt an ecosystem and try to vote against beneficial proposals. However any outsider who tries to manipulate the vote auction is sacrificing money and has to buy into the ecosystem first to participate. The same thing can happen to stake-weighted voting systems where people can temporarily buy coins to affect voting only to dump the coins later. With donation auction voting attackers must make a greater sacrifice because their donations are lost and will be used to help the further development of an ecosystem they are trying to attack.

Democracy vs. Stakevoting

Stakeweighted voting and donation auction voting require much more sacrifice compared to purely democratic systems. They are also more resilient to sybil attacks. However some people may want to encourage broader community participation so if ecosystems have some form of human identity or reputation systems (proof-of-identity/PGP/biometrics etc) they could use general majority voting among interested or qualified individuals as a broad measure of support for proposals as a first step before creating an official donation auction vote proposal.

Conclusion

Donation auction voting can be a useful method for coin systems like Bitcoin that don’t have built-in governance to help the decision-making process for upgrades and new features as well as fund software maintenance and development. There are a variety of ways to implement donation auction voting and a variety of rules that can be used. There also needs to be support systems in place to make sure the voting process is smooth and the donation funds are distributed efficiently and properly.

[Background Note: Currently there are many digital coin ecosystems like Bitcoin. Many do not have any built-in governance. There are some ecosystems like Bitshares and Dash that have governance using stake voting. Bitshares is a delegated Proof-of-Stake system (POS) that uses stake weights not only for governance, but for consensus as well. The more stake (or shares) a person owns the greater voting influence he/she has. POS systems are designed similar to the millions of corporations and businesses that exist today using shares and shareholders. Hence POS systems will probably be the most common form of governance for decentralized-autonomous-organizations (DAO). Dash uses a unique Masternode system based on stake to govern its ecosystem. Dash holders reserve a portion of their stake to become a Masternode in the system to gain voter rights. ]

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@steemrollin