Block Producer Accountability
Everybody needs to be accountable to somebody, and undoubtedly Block Producers (BP's) in the EOS.IO network will need to be held fully accountable to voters. Token holders who vote can only do this with an effective system of oversight and transparency in place relating to BP conduct and integrity.
Simply relying on votes does not equate to proper accountability, and therefore fully mitigate the risks from a gradual centralization of vested interests between BP's. Nor does it mitigate the potential for individuals within each BP to behave in ways that are inappropriate - defined as a breach of the agreed EOS.IO constitution.
What Incentivizes Good Behaviour?
Good behaviour by Block Producers is incentivized above all by risk and personal cost. An ecosystem with no effective oversight of BP's is a weak one; much like the global Financial Services system 20 years ago with its 'light touch' regulatory framework. History now shows that lack of oversight, sense of no personal cost from behaviour and no perceived personal risk, lead to a variety of behaviour fuelled by self interest and greed, which caused huge damage to the wider ecosystem.
What Counts as Effective Oversight of Block Producers?
There are varying viewpoints on how best to oversight Block Producers. One view is that they should continually monitor one another and internally self-police, and that by voting for one another they can vote out those with bad behaviour.
We disagree with this for the primary reason that it entrusts a group that long term might develop potentially vested interests to game a system for personal gain, to self regulate. It proposes a light touch regulatory approach to Block Producers in effect.
In the context of a decentralized network such as EOS.IO, the question is who should therefore police the Block Producers if not the BP's themselves, and how do we incentivise people to do so?
Block Producer Integrity Fund
A bounty is not a new concept, and is a simple contract whereby there is a pay out for a defined deliverable.
We propose that the EOS.IO constitution includes a requirement for a very small percentage of BP block rewards to fund and keep topped up an Integrity Fund that incentivizes community members to actively check up on and test regularly the integrity, ethics and behaviour of all 121 BP's and validators, and their underlying members.
This system of controls will have defined boundaries of acceptable behaviour for bounty hunters, and how any potential breaches are reported and handled by the community - for example going to arbitration, review and eventual publication of a transparent report for the entire community and voters to be made aware of, and giving a Block Producer an opportunity to respond and deal with the issue.
More importantly the knowledge that such oversight is active provides the risk and personal cost to each Block Producer required to ensure they only act with the highest integrity. Knowing somebody in their inner midst might in fact might also be willing to report bad behaviour to the community and face the consequences from voters, is a powerful risk incentive.
In summary, we believe that Block Producers should not be entrusted with self regulation. It is the community responsibility to put in place a defined oversight mechanism and controls to help align BP behaviour and integrity with the defined EOS constitution. We hope that this furthers the debate as we move towards launch.