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Governance through voting, what works and what doesn’t. Today I want to talk about one of the most important and misunderstood parts of creating a successful blockchain – voting.
Now let me start by saying that voting in any system of governance is complex. The problems begin with voter turnout. For U.S. presidential elections turnout is not even 50%. Voting as a way to make decisions gets complicated fast. Think about voter districting or voter delegation like the U.S. Electoral College. A lot of smart educated Americans don’t understand it.
Now we haven’t even introduced a whole voter information problem. You can’t effectively vote on something unless you are properly informed, but how do you get informed? Do you even have time to get informed? Not surprisingly, most people who vote on things do so with incomplete information on the subject.
All of these voting issues exist in the blockchain space as well. But the problems are amplified by the fact that highly technical subject matter and the unfriendly tools you need simply to cast your vote. We could run through a whole episode about the voting problems or proof of work protocols but instead, I want to focus today on proof of stake voting, specifically delegated proof of stake voting or DPoS or what I like to call it democratic proof of stake if you will.
Delegated proof of stake voting in many ways, resembles a parliamentary-style government where citizens delegate to other people decisions that they could have made themselves if they’d had the time, the energy, the knowledge. In DPoS, the citizens are token holders one token, one vote, and these token holders vote for people who will make sure that the blockchain transactions are valid. On the WAX Blockchain we call these validators Guilds. There are some excellent advantages to using a voting delegation system like DPoS. It allows the blockchain to perform at a much faster speed, at a lower cost, and with much lower energy consumption.
But how does your everyday token holder know which block producers to vote for? For that matter why would the average token holder even care who does the validating, especially if they hold very few tokens? When we were designing the WAX Blockchain we spent a lot of time thinking about these questions.
So let’s summarize the three biggest pain points in delegated proof of stake voting are low voter participation rates, poorly informed voters, and the potential for vote buying.
Let’s take a look at voter participation problems first. Voter participation rates in DPoS based blockchains have historically been nothing short of atrocious. On EOS, the biggest DPoS blockchain in the world, voter participation is consistently below 3%. Now there’s not one single factor for this painfully low voter turnout, but there is one big problem – the lack of incentives. Most DPoS chains ask token holders to invest real time and energy into voting for the blockchain validators, the block producers. But they do so without a strong incentive to drive that behavior. I believe there has to be a clear and worthwhile incentive to get people to turn out for a vote and we know that most people react in a positive way to financial incentives.
So WAX introduced a concept of voting rewards where token holders earn tokens based on the frequency and consistency of their voting efforts. These token rewards are generated through inflation and they are paid out on a weekly basis. Since we introduced voting rewards we’ve seen wax voter turnout for guilds hold at about 17%. Now 17% isn’t perfect but it’s substantially higher than the 2 to 3% that many other DPoS chains achieve.
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