Using digital identity for governance

Temperature Check
1

Currently, the state of who gets the most say in governance be it on Algorand governance or AlgoFi governance depends purely on the amount of Algo (in algorand governance) and BANK (in AlgoFi governance). This poses a risk in which a single entity having a large capital can steer the direction of governance in their favour, earning more governance rewards, creating a cycle that continues too give them more influence and rewards.

We could try to overcome this risk by reducing the influence of a single account with large capital and increasing the influence of each smaller individual accounts but this would be useless if these accounts are annonymous, as the entity with the huge capital could just create unlimited multiple smaller accounts to exert the same unbalanced level of influence.

I am aware the the crypto community values anonymity, we could also try to reduce this risk by tying some sort of real world identity to each governer (for example the requirement of KYC), but maintain anonymity by keeping the identification layer super hidden and try to keep this information hidden and encrypted. This will drasticly reduce the risk of one single person having too much power, however, there are still issues like those unregistered under a country, or those who are unbanked will not be able to participate in governance, also, entities issueing these IDs could theoretically create multiple IDs, like for example hypthetically the Malaysian government could have issued a huge number of IDs to non-Malaysians who promised to vote in their favor, to influence the elections.

Another way to preserve anonymity is by using biometric identification like how Tinder verifies profiles through facial recognintion, or using fingerprints, and keeping this identification level super hidden and secure.

But one could also create multiple biometric IDs with current the technology of deep fakes. And no matter how secure you try to keep this identification layer, there is still risk that it can be hacked and identity doxed and revealed.

To me, anonymity is overrated. I prefer to know who my governers are, when our leader is without a face, it is difficult for us to trust that whatever governance decision they are making for us are for the greater good of the ecosystem or for their own selfish gains and rewards.

Ethereum would not be what it is without Vitalik, the same with Algorand without Silvio, Cardano without Charles Hoskinson. There needs to be a real world personality that we can study and relate through their words and thought process, for us to have more trust.

Maybe the same could go for Algorand governers or AlgoFi Governers. Instead of one supreme leader, a team of leaders who are vocal about their thought process and that the community can put their trust and vote in.

Sure remaining anonymous protects us from the governments who are afraid of crypto to target us and bring us down. But how long is crypto to remain in the dark? As long as the governers are practicing justice and benificence, I’m quite sure the poeple will defend them if current governments try to bring them down in a shady way.

So three/four possible options here I guess

Two methods that preserve anonymity :
1/ KYC compliance for governors, but try to keep identification layer hidden and secure and encrypted and unhackable
2/ Biometric identification, but try to keep identification layer hidden and secure and encrypted and unhackable

or just ditch anonymity
3/ Share your socials, twitter/ facebook/ instagram, share your thought process, real world picture, youtube talks/ broadcasts

4/ A mix of all of the above

I see many of the discussions here are about rewards emissions and benefits for BANK holders, which kind of shows how these governers are trying to benefit themselves.
It would be nice to see more discussion about how to improve the adoption of our platform, how to bring people in, how to streamline adoption, how to show people that this is better than traditional finance. How to help the unbanked who might not even have internet connection to access this platform. That’s where our funds should go.

Maybe for another thread: How to make Algo on-ramp from fiat easier for people living outside the United States. Currently Pera wallet uses Moonpay which has absurdly high fees, AlgoFi uses Coinbase to onramp which is not accessible for people living outside the united states (correct me if I’m wrong).

Currently I use Binance to onramp because I can use my credit card to onramp, but still with 2% fees, which is the lowest I can find out there, but is still a barrier for entry for people in general. I can’t even buy Algo directly with fiat on Binance. I have to first buy something else like BTC or ETC or BNB, then trade that for Algo, then transfer that Algo to my PeraWallet, which is another hassle and preventing widespread adoption. Maybe something could be done about this?

Maybe even make onramp with fiat other than USD possible? currently we have to change from non-USD fiat to USD fiat first which incur additional exchange fees. Maybe create stable coins for other currencies other than USD like what Terra could have been? Not sure how but it sure will improve adoption.

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For me this is big big no go.
I think this will actually decrease decentralization, because those who will not share their identity will not participate. Probably will move to other platforms. Also logic that those who have most have most to say and decides what to do, do not completely apply, because on here governance Forum everybody can say and discuss. And in here it doesn’t really matter if you have any tokens or not actually, so this is like old Greek polis. All can participate and have equal say. But then when actual voting comes, those who have invested most should have most to say. I find this purely logical. So first community discusses and then those who have invested most can decide if they want to take that risk or not, but proposal was equal.
This same discussion/topic was hot in Aave community about year ago and they decided that there is no need to worry about this. Actually Stani, founder of Aave, commented this issue on Nordnet Rahapodi podcast. He said that if some big party with deep pockets will acquire most of Aave tokens or significant amount of tokens and try to use power in their own interests and do harm to others, they will simply in Aave team take copy from Aave and paste and create new Aave 2.0 and distribute those aave 2.0 tokens to everyone else than that big fish who caused the harm to community. Also if some party tries to do harm to others, others will likely ditch the platform and go to somewhere else leaving big fish with bag of worthless tokens.
Also you mentioned that already here in Algofi community you can see people try to benefit by acquiring tokens and trying to distribute them to benefit their interests. I have to say that I am the one who proposed discount for BANK holders and I have just a very small bag (at least for now). So I think you are wrong in this. If small holders do not benefit from tokens financially they have less interest to participate because their voting power is meaningless. So if BANK is purely governance token without monetary value, then small baggers have less incentive to participate. Of course some are here just to see crypto adoption to grow, like myself. But in bigger picture increased value will benefit all. And most those who do not have much, because small differences means more.
Also trust and trusted / admired faces can cause a lot of problems like our dear MIT boy SBF. So I like more the “Bitcoin’s” slogan: In code we trust.
Of course we have to have a little bit trust. For example I trust Algofi team and what they do. But in the long run I hope that we can really create trustless system. And I really can’t see any benefits doing KYC. Sounds like traditional finance that is purely based on trust. This also will cause other problems. For example, GDPR regulations where to keep data and how. Have to report these to EU and USA. Will Be completely mess. There are already huge conflicts between EU and USA and companies who operate in both continents.
There is other thread here in Algofi governance Forum discussing regulations etc. And seems like people want to settle this into USA, which is one of the worst regulation jungles in the world. So more headache. (I study business law and can say there is way nicer places to have a crypto company than USA or company at all)
I apologize this harsh reply. This is in no way personal, just my honest thought.

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I think this will actually decrease decentralization, because those who will not share their identity will not participate. Probably will move to other platforms.

It also disrupts the incentives of the token which disrupts . In a world where votes are one vote per person, there is no reason to hold much BANK because holding more of it does not yield you more votes. It would have no purpose in existing, we could just let anyone who has any collateral on Algofi vote.

Like most stake based systems, the economic incentive is that the more BANK you hold, the more incentive you have to not screw up the protocol, because you will be hurt financially. The vote based on quantity of capital creates a decentralized incentive that we can all trust keeps bad actors out. If it was one vote per person, people who want to tank the project (maybe because they are involved in a rival project or chain) can easily acquire votes and do malicious things like try to depeg STBL2.

If small holders do not benefit from tokens financially they have less interest to participate because their voting power is meaningless. So if BANK is purely governance token without monetary value, then small baggers have less incentive to participate. Of course some are here just to see crypto adoption to grow, like myself.

BANK should primarily exist for governance. I’ve been fairly public about that opinion. The tl;dr is that the purpose of BANK is to enable users to make the Algofi Protocols more useful, not to allow BANK holders to extract value out of the Algofi. The DAO isn’t a company that exists to make token holders yield, its a governing body, like the Internet Engineering Task Force, that exists to reach consensus on protocol changes (parameters, taxes, etc).

Control of the protocol should be in the hands of its stakeholders, proportional to the value they bring to the protocol. Adoption is not going to come from retail traders or enthusiasts. It is going to come from startups and developers creating apps that every day users want to use, just like what happened with smartphones. It is going to come from large financial entities who see an opportunity to make sustainable yields providing liquidity. These actors should control the majority of BANK because they are the ones bringing the majority of value to the ecosystem. Retail traders and hobbyist should only have as much control as value they are bringing to the table. In DeFi that is not going to be a ton, but in certain other areas of web3 (like gaming or music) its going to be a ton.

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Most of the things I agree with you but not with this only governance thing. And we do not even have to share this view and still I respect your opinion. Eventually community will decide the direction.
But assuming that hobbyist are not bringing much on the table is arrogant or maybe uneducated. For example Linux which is main software in over 80% of all used devices in the whole world, was invented and created by Linus Torvalds as a side project just for fun. Also created Git because just thought it might be useful.
I think it is dangerous to assume that only big companies will invent and create when actually small hobbyists and start ups will create and after proven to work and show some potential, large companies will aquire them.
This is actually very huge problem in many smaller European countries where innovative start up scene is active, but when the companies actually starts to grow, bigger companies will aquire them.

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And to mention that smartphone thing. 85% of all smartphones uses Linux as a underlying technology. Again created just for fun, because Linus had extra time back then.

I do not mean to be rude, but overlooking is not good way to go.

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Most of the things I agree with you but not with this only governance thing. And we do not even have to share this view and still I respect your opinion.

Glad to hear it, I respect your as well and we don’t have to agree. The discussion is valuable to those still figuring it out and I appreciate your willingness to engage.

Eventually community will decide the direction.

Agreed

For example Linux which is main software in over 80% of all used devices in the whole world, was invented and created by Linus Torvalds as a side project just for fun. Also created Git because just thought it might be useful.

Yeah but I didn’t just say companies, I also said “developers” which includes solo devs like myself. I’m sorry of my language didn’t convey that. To me hobbyiest are non technical users who are just interested in blockchain from a more conceptual level. Linus did invent both git and linux but both required other developers and corporations who took it to that market share. Git isn’t where it is today without Github and Gitlab. The linux market is dominated by distros with major corporate backing (Canonical and Redhat).

I think it is dangerous to assume that only big companies will invent and create when actually small hobbyists and start ups will create and after proven to work and show some potential, large companies will aquire them.

I never said big companies. I think it will be mostly smaller companies and solo devs in the near term that maybe will grow into bigger ones, just like what happened on mobile. Even liquidity at this point is dominated by smaller financial firms (small quant hedgefunds, family offices, etc). But these guys have orders of magnitude more capital than the combined holdings of retail.

This is actually very huge problem in many smaller European countries where innovative start up scene is active, but when the companies actually starts to grow, bigger companies will aquire them.

This is one reason web3 is so exiting to me. These companies won’t be able to pull the ladder out behind them and prevent new entrants from competing. It eliminates a lot of the incentive to try to acquire everything when doing so doesn’t create a moat. They can’t block access to the chain because its permissionless. Anyone can start a competing Algofi if it gets co opted, especially since the code is open. This is also a form of consumer protection. One of the reasons I don’t think BANK should focus on anything but governance is its a poor long term growth strategy. Any yield on BANK has to be earned off its users. In an ecosystem that is completely open and permissionless the lowest cost platform is going to win, and that’s the platform that’s not skimming off the top to pay holders of a token who happened to have been involved with the project early.

So I think we’re on full agreement on all these points. I am critical of the idea that primarily speculative retail traders are bringing anything to the table with their small amounts of capital, lack of development skills, and lack of reach to generate adoption. I don’t see any reason to be focused on trying to enrich that demographic, seems like a waste of effort.

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I understood the terms wrong and thought that you have strange angle to attack against small contributors that just helps because of joy and contribute a lot. But I see now what you meant :slight_smile: Sorry about that
And yes of course Linus needed lot of help from the others along the way and slowly community grew to it’s current form.
it is very true that retailers do not have same amount of capital than companies in broader definition (including small quant hedgefunds, family offices, etc, like you said), but I think in a long run retailers will make the difference if crypto will be widely used or not, because in the end those companies consists of humans and average every day dudes who’s behavior will guide how they think at the work and what they consider to be normal and common. Back in the day, stock were risky assets and today just basic stuff.

replying to your last part. I hope you do not understand me wrong. My idea is not to include every singles CryptoBro and speculative trader, not at all. My intention is to make Algofi profitable in a way that it can collect enough fees from markets to be able to operate without need to drain the treasury or raise funds from VCs or thru token sales. Also small benefit of owning BANK will bring long term users and increases user engagement in a long term. Also if BANK price stabilizes because of sound financials behind Algofi and large amount of long term holders, token can be used for example as collateral and community treasury can use it in possible future insurance fund to back possible future losses etc. so I think stable and slowly raising BANK value will bring benefits rather than harms. So in no means my purpose is to maximize short-term profits or even mid-term. And I am here just because of I really like what this technology has brought to us and idea/vision behind cryptos originally. I try to find the fine line between MoonBoys (maybe a bit exaggerated, but you got the point) and those who are here from purely ideological reasons. Because I think this golden mean will attract most people into this space and into Algofi in long term. Many who uses Algofi probably also wants to hold some BANK tokens. and stable slowly increasing price tells that system is healthy and is going into right direction. So there is also psychological aspect to consider.

Like I said previous comment, I study business law but found coding/programming because of cryptos. I wanted to fulfill my own idea I had. Now second year in a row of programming studies (my minor is CS) I finally think I have enough knowledge/skills to do my own project on Algorand. Hope it sees light some day :smiley:

Thank you @pescennius for these juicy conversations :slight_smile:

This got a little sidetracked, but maybe it is ok sometimes :smiley:

Back to original KYC, I hope to hear dev team thoughts about this, and if you have already thought this.

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I’ll make this my last comment on this here so that we don’t derail this too much. If you want to pick it up feel free to DM me or start another topic.

but I think in a long run retailers will make the difference if crypto will be widely used or not, because in the end those companies consists of humans and average every day dudes who’s behavior will guide how they think at the work and what they consider to be normal and common. Back in the day, stock were risky assets and today just basic stuff.

I think this is wishful thinking that is also not accurate to the history of technology adoption. Where everyday users will be valuable is in adopting the apps built on top of this technology. We’re already seeing great examples of this in the Algorand ecosystem like HesabPay in Afghanistan. Most of their users have probably never heard of Algorand the same way most users of Gmail don’t know what SMTP is.

My intention is to make Algofi profitable in a way that it can collect enough fees from markets to be able to operate without need to drain the treasury or raise funds from VCs or thru token sales.

It doesn’t need to be profitable. The protocol is a bunch of smart contracts that are already deployed. As long as Algorand is operating, Algofi will be available. The Dev team has already raised VC funds and they don’t have the ability to simply issue new BANK tokens because the supply is fixed. That’s why a governance only token is sufficient, the protocol doesn’t additional funds to stay online.

Also small benefit of owning BANK will bring long term users and increases user engagement in a long term.

We already have incentives for people to use the platform, they are the yields. If you mean why people should use it over other platforms (ie Folks), that has more to do with features than financial incentives. If there is a financial benefit to owning BANK but Folks is better, I’ll hold BANK and use Folks. I can get behind ideas for BANK that incentivize using Algofi, like the other topic about discounted STBL borrowing rates. That’s because the value of BANK is still tied to usage of Algofi. It also doesn’t generate value for BANK holders by skimming value from users.

I finally think I have enough knowledge/skills to do my own project on Algorand. Hope it sees light some day :smiley:

I’d love to hear what you are working on. DM me if you feel like sharing.

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