Distribution of Interests

Since the governance rights are represented by digital assets, the distribution of these interests to various stakeholders (investors, management team, network validators, end users et.al.) is crucial to align their interests for the common good of the blockchain.

A discretionary distribution policy is required to produce effective outcomes. For example, we need to ensure that the concentrated trading pressure by large token holders does not affect governance rights, or that the right voices can be heard or brought to the decision table even though they do not have sufficient digital assets.

One approach is to implement ‘vesting cliffs’ to weed out short term profit seekers (who just want to sell digital assets for gain) rather than those who want to build the Zetrix blockchain for long term good. In other words, these token holders will need to hold for a minimum tenure or a specific ‘cliff’ before they are eligible to vote. The tenure can be time-based, performance-based, or milestone-based, or a combination thereof.

Conversely, those that hold large amounts of digital assets but do not participate for an indefinite period may be subject to ‘reverse vesting’, meaning that their voting rights will be forfeited.

On a separate vein, members of the developer community decentralised around the world who actively contribute to the progress and health of the blockchain (such as debugging, auditing, ethical hacking, community education and other bountiable activities) can be allocated governance rights or digital assets based on a ‘linear vesting’ schedule. This is similar to an ‘earn-as-you-go’ incentive structure to attract and retain genuine governors for Zetrix. The digital assets are endowment from the Community Building allocation.

The rationale for the above is to diffuse the concentration of voting power by large token holders and balance out with small minority holders so that it is more equitable. Eventually in the future, when there is a thriving and vibrant network for Zetrix, other mechanisms such as ‘quadratic voting’ for public goods (as popularised by Ethereum creator Vitalk Buterin) or ‘convertible allocations’ (where voting rights are decoupled from governance tokens) can potentially be explored.

Finally, it is important to note that while consensus takes place on-chain, governance will be a hybrid on-chain and off-chain matter as it is not practical to be mutually exclusive (either one or the other) given their respective merits. A decentralised structure is only as good as the level of participation and quorum from its members, which is often insufficient. In practical reality for most cases, a more accurate description is ‘shared governance’.