Written by Zack Gall

Data Analyst at ICO Alert
November 16 2018

Everything EOS #34: ECAF, Governance, and Referendum with Aurora EOS and EOS NY

 Zack talks with Myles Snyder (Aurora EOS) and Kevin Rose (EOS NY) at Scaling Blockchain after the SF EOS Hackathon.





Myles Snyder (Aurora EOS) and Kevin Rose (EOS NY) join Zack at Scaling Blockchain after the SF EOS Hackathon to discuss a wide range of hot topics on governance including ECAF, Voting, and Referendum.


1:40 Referendum almost ready gets Myles excited.

2:20 On-chain governance being better understood and defined

3:20 Every blockchain is a governed blockchain

5:05 ECAF Ruling Controversy

7:20 The EOS Constitution and Its Intent

10:15 Referendum Explained

12:20 Scope and Definition of the Constitution

15:20 What is the job description for a block producer?

22:20 Referendum Explained by Kevin Rose

25:20 dApps as Proxies

28:20 How to Submit Proposal to Referendum

30:20 WPS and eosio.saving

31:50 REX Including Name Auction and RAM Fees

33:20 What do we do with the fees in eosio.ramfee from mainnet launch until present?

36:20 EOS New York’s Thoughts on Enforcing Recent ECAF Ruling

38:20 More Thoughts and Opinions on ECAF

45:50 EOS New York Hardware Wallet

46:05 Aurora EOS Focusing on Education



Everything EOS is a podcast hosted by Rob Finch (Cypherglass) and Zack Gall (ICO Alert) that follows the EOS ecosystem: dApp spotlights, VC partnerships, announcements, and more!

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[ Transcript]

Zack: Alright, I'm here again at the Scaling Blockchain conference in San Francisco, the Monday after the U.S. Hackathon. No idea when this is gonna get published, it depends on if I find time to do it, but hopefully it's one week from the time we have this conversation. And so I found these two guys at the conference, they sounded kind of knowledgeable about EOS. At least, this guy did. So what are your guys' names? Who do you represent? What do you guys do?

Miles Snyder: My name is Miles Snyder and I'm the CEO of Aurora EOS, a standby block producer on the EOS mainline.

Kevin Rose: Kevin Rose, head of community [crosstalk 00:00:30]

Zack: Wait, what's your name?

Kevin Rose: What's that?

Zack: What's your name again?

Kevin Rose: Kevin Rose. Head of community, co-founder-

Zack: Weren't you on the podcast before?

Kevin Rose: Yeah.

Zack: You're a two time guest.

Kevin Rose: Yeah.

Zack: You're the first two-time guest, people.

Miles Snyder: Wow.

Zack: Congratulations.

Kevin Rose: Oh, I'm honored to be here. Kevin Rose, co founder, head of [inaudible 00:00:50]

Zack: You were so confused there.

Kevin Rose: Yeah I was like.

Zack: We've never met.

Kevin Rose: No we just talked. We know each other.

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Zack: [inaudible 00:01:01] So today's topic of conversation. So there's a lot of topics of interest for everyone within the SIO ecosystem, but we all happen to have an interest in governance. It's very exciting right now. So what about governance and what's going on with the arbitration, governance voting as a whole. What gets you excited?

Miles Snyder: So what gets me excited is the idea that we can put some structures in place now that we have a public referendum contractor that's almost ready to be deployed.

Zack: I feel like I've been saying it's almost ready for like months.

Miles Snyder: But now it's actually almost almost ready. And then it's gonna be finally almost ready. And then it's gonna be actually ready. But that excites me because then we're gonna actually be able to hold an unchained vote of token holders that's not just voting for block freezes, it's actually voting on more important things like adopting a new constitution. So the fact that we're gonna be able to do that is gonna allow us to focus more on what a real ELS constitution looks like rather than just a temporary sort of interim constitution that we have right now.

Zack: I have a feeling your answer will be very similar. But what has you the most excited about the current state of governance on the ELS main net.

Kevin Rose: Well that it's active is incredibly exciting in and of itself because sometimes this is really esoteric and can be boring stuff sometimes, but it's very, very important. But I think one of the things that I think it's starting to dawn on the community is that what exactly governance is as it pertains to the US main net or blockchain in general is being better understood and more defined. Because I think there's a constant argument against some of the things that we're doing in government saying, oh, he was EOS wasn't governed but isn't it supposed to be governed blockchain?

Kevin Rose: So if you don't wanna have this constitution of all of these rules, then you don't want to come from blockchain. That's not true. Because governance is just a method to make decisions, and depots is governance.

Zack: I really... So Miles did one of the speeches this morning, you were like the second speaker after Rob. I loved what you said. Even if you don't have a governed blockchain, it is a governed blockchain.

Miles Snyder: Every single blockchain out there is governed in some way or another. The thing that I think the crypto community kind of oversimplifies as they say, your blockchain is only governed if you have some form of on chain governance. Which isn't true. Bitcoin is governed through a process. It looks different. It takes place off chain, but bitcoin is governed. Ethereum  is governed, they're all governed because they're groups of humans that are interacting on a network and when you put humans together in a network, they're gonna figure out political processes to govern that network.

Zack: That's why I was excited with the hackathon winners last night, so it's new. NuGet..

Miles Snyder: NuGet.

Zack: Can someone else to explain what they do. So I don't have to.

Miles Snyder: It was actually hot. I was there. Near the front row, but I was actually live blogging the entire thing. So recording with one hand typing for another and trying to listen and transcribe is so difficult.

Kevin Rose: My understanding of NuGet is that it's essentially a incentivized get hub.

Zack: I keep interrupting. We keep interrupting each other. You want to do it?

Kevin Rose: No, go ahead.

Zack: Yeah, that's basically a decentralized version of get hub where there's a consensus that needs to be reached for a code to be pushed to the platform or software.

Kevin Rose: But also one of the biggest, and this was their primary use case and they talked about was incentivizing the maintenance and updates for open source code, through a token model.

Zack: And this is the kind of how it ties in.

Miles Snyder: So if you're, if you're a bitcoin core theory, that code lives on get hub and it has to get pushed live to the network. Who holds the keys to push that code live. And that's the governance mechanism of a non government blockchain.

Kevin Rose: I would say there's that layer, but there's a layer deeper which is the miners have to adopt certain.

Zack: they have to install the software.

Miles Snyder: and then there's a layer one deeper which is that full nodes have to run the software. I mean there's quite a few layers to that process.

Zack: So do you.

Rob: Fucked up. What's your next question dude?

Kevin Rose: Why doesn't someone else's just jump in his time?

Zack: Well, so I think the thing, sort of the elephant in the room that we all wanna talk about, or maybe we don't want to talk about it, but we should, is what happened this week, which is that the ICAF, the IOS core arbitration forum issued its first decision.

Kevin Rose: That's exciting. Does that have everyone else excited?

Zack: It's scary because now we opened up this can of worms with it. It's a can of worms we wanted to open. It's just so everything's happening the way everyone thought it would back in January.

Miles Snyder: So I think it sets a little bit of a dangerous precedent. And you know, I think when you say it was a can of worms, we all wanted to open. Well, I think there was a lot of people who thought that arbitration could be something interesting to add into a smart contract platform, but the way that it was actually structured with ICAF and being a single arbitrator that, that sort of has perceived authority over the chain based on the constitution that was included and made in that launch. Although that constitution was not ratified by a vote of token holders and it's not enforceable, and it contains a lot of provisions that a lot of people disagree with and we're kind of in this weird position right now where ICAF has authority from a constitution that wasn't ratified by a public referendum and they are now using that authority to enact decisions.

Zack: They are also not being compensated, am I correct?

Miles Snyder: They're charging. They're charging.

Kevin Rose: They collected 10000 EOS in fees.

Miles Snyder: The decision that was reached today costs the person who had their accounts stolen $400 and that was a discounted rate that they got. And that person actually had to pay all the fees because they were never able to identify the counterparty.

Kevin Rose: Fees are fine. There's nothing wrong that. You should be paid for work and arbitration cost 100%. But there's a problem. There's a serious problem with the way that we talk about the constitution with EOS. It being open source.

Zack: Hold off. We got around of applause. I don't know who's speaking right now but...

Miles Snyder: But they did a great job it sounds like.

Kevin Rose: Yeah. Sounds like they did awesome.

Zack: Alright, I don't know.

Kevin Rose: No it's okay. It's good. There is, when we talked about the ratification of the constitution. It is not required for the constitution to be authoritative. And I'm not saying that because that's my opinion. I'm saying that because...

Zack: Everyone loves what you’re saying right now.

Kevin Rose: EOS is open source software and if you Zach, go launch a chain, I can't tell you how to run it and because block one was not involved in the launch, it was launched by the USB net was launched by an entrepreneurial group of individuals that they launched the APP launched chain with the constitution. That's it. That's what it is. But the intention because it was launched by people who want to do something amazing with this grand experiment. The idea is to make it interim, because it's not supposed to be forced on anybody, but it very much is enforceable, does not need to be ratified, but we should amend it because of all the very, very clear problems that are with it.

Zack: Kevin is totally right. He makes a good point. Which is that, anyone could have launched an EOS IO blockchain with a different constitution and given the way that the constitution works, every user signs a hash of the constitution with every transaction.

Kevin Rose: No they don't. They don't.

Zack: Oh, is that not. Is that not how actually?

Kevin Rose: That was how it was supposed to work. That was one of the ways that it was tried, but the problem was that it actually bloated the transactions to such a size that it would slow down the actual transplant network.

Zack: That makes sense.

Kevin Rose: Or any action they were. I was actually trying to work out a way to have explicit consent through the constitution, through transacting the network the other day, because there's a genesis dot Jason, which is a number of parameters that you launched with an ESIO chain. The hash of that is the chain id. So if you go to like a block explore block set io, you can see the chain ID. That's the hash of genesis dot Jason. Had we have put the constitution in genesis.jason, that hash, the chain ID, is signed in every... it is included in every transaction signature on the network. We could have done that, but we didn't think of that and had we done that, we also wouldn't have been able to change it ever because you can't change the chain ID.

Zack: I don't know what channel is, it's one of the ones we're all in. I think Thomas said something like that because he was...was Thomas Cook still with Glock One at the day of launch or did he leave after launch?

Kevin Rose: I'm not sure.

Zack: He kind of, he wasn't negative about it, but in retrospect things that have been done differently. I think that's always gonna be the case [crosstalk 00:09:40] And things were the main that launched and things were released that maybe in retrospect weren't ready. And this is a great example of that. Is this something, for instance, you researched it, that could be implemented through a referendum vote?

Miles Snyder: Having some sort of explicit...

Zack: Consent.

Miles Snyder: Consent to some kind of contract based contract.

Zack: Is it something that you think would even be worthwhile to do at this point?

Kevin Rose: I think it maybe, maybe not. I mean, the referendum isn't about certain code itself, the outcomes of referendum or not enforced by any code. It's like [inaudible 00:10:21] just take it as a signal and they go do it because that's what they've been told to do. It's a means to solicit the[crosstalk 00:10:27]

Miles Snyder: There's two types of on chain governance has what's called tightly coupled on chain governance, which is what voting for block [inaudible 00:10:31] is, meaning you cast a vote on chain and it programmatically determines the outcome. So and then there's loosely coupled launching governance, which is what a referendum is, which is, it literally provides a signal that the block[inaudible 00:10:43] have to go in and force.

Kevin Rose: I think, I guess when I think of referendum or when I asked that, it was as if that update couldn't have been done without a referendum. I liked your blog posts. You wrote about the precedent being set with the REX. Because it involved the movement of funds. So even without a referendum, we could have made all kinds of updates to the chain and we do.

Miles Snyder: We've updated over 35 times.

Kevin Rose: So I guess.

Miles Snyder: And if you followed the white paper by the way, we would have had to have every single update be a referendum.

Kevin Rose: and I think maybe that's...

Miles Snyder: And a 30 day delay period right.

Kevin Rose: We would be slowed to a halt in terms of the development of the chain. It would be bad.

Miles Snyder: But you know, what I think is an interesting conversation to have, is like what is the function of a constitution in this sense, if it's not going to be that users sign it with every transaction, and we also sort of realize the extent to which a lot of these things aren't really enforceable. I kind of think of the constitution as like a social signal or sort of a shelling point by which we can define certain standards and yes, it's not enforceable, but it sets expectations. I was having a conversation with Haley from EOS cafe block and he brought up a really good point which was that going into this first referendum, it would have been hard for the community to decide what the threshold for votes is, without having the constitution to look to, to say, Hey, this is the number that we set, this is how this is how we're gonna do it.

Kevin Rose: It has to [inaudible 00:12:10] on the way we vote.

Miles Snyder: Exactly. Yeah. So I think it's things like that are useful about it, but I think the scope of the constitution when we think about drafting and we have to think about, you know, you can't include all these different provisions for things that are unenforceable or unknowable or...

Kevin Rose: I think the constitution should be as simple and basic as possible. Bare minimum. Like if we want more features, those can be often in on a user by user base.

Kevin Rose: I think it shouldn't even be called the constitution because...

Miles Snyder: what should it be called Kevin?

Kevin Rose: Well I think it should be called..

Zack: What term do you wanna coin?

Kevin Rose: We wrote an open source proposal for, for onshore governance. The EOS platform user agreement. So the word...

Miles Snyder: And I recommend everyone go read it because it's really, really well done.

Kevin Rose: Thank you Miles. The word constitution is inflammatory.

Miles Snyder: Very powerful word. Especially the United States.

Kevin Rose: Yeah. And we take it a certain way, but that word means something very different. In Sweden it means something very different in China that has different connotations. Culture applies meaning to it. So for that reason alone, there's been a lot of confusion and misunderstanding about what it is meant to be and what we're doing. User agreement or a platform agreement of sorts.

Kevin Rose: That was how I think Dan way before we went for [inaudible 00:13:26] launch, I think it was the Virginia tech video and he was talking to the students and he was explaining what a constitution was. He simplified it in your terms and services agreement that you see and you skip and click okay on every, every site you've probably use. So that's kind of an issue though with the constitution.

Kevin Rose: Even though it's unenforceable right now, whenever you sign a transaction, usually before you sign a transactionally signed a new contract that pops up.

Miles Snyder: Well, depending on your wallet you use, they sometimes show it, but yeah, I mean I think the language that was used in the original EOS white paper was a peer to peer terms of service agreement. But I do think that it should be. I agree with you, it should be as simple as possible. It should serve as sort of a shadowing point for how we make decisions. It should define the parameters that we use for an on chain referendum and it should maybe define certain standards about block producers and how they should be expected to behave. But I think we must realize that these things aren't enforceable unless the community decides to enforce them. So including things like everything that's deployed on EOS IO must be open source.

Miles Snyder: Well, we saw things that were deployed that weren't open source and they were allowed to run and there was no one really cared to try to enforce that. And so in my opinion, that sort of undermine the legitimacy of the document as a whole when you had these things that were just being done out in the open that went against this constitution and no one was doing anything about it and no one really cared to do a thing about.

Zack: Do you guys ever worry that nobody cares about this? I mean, I know within the like there's a hardcore EOS community and they're all here this weekend, like we care about this stuff, but does it bother you to know that your average person probably doesn't?

Kevin Rose: No. I don't think so because my mission in job is educationally. That's a big reason I love doing the podcast is I take this hardcore people that are in the weeds in this stuff. I try to filter it down and pick out the important piece and try to like tell the general people about it. But it's very difficult. I think education, you've kind of made it your mission as a person and a blog for here even before being a blog piece or to educate. You guys kind of agree that that's kind of, I mean,

Miles Snyder: I think that the constitution can still be useful without the vast majority of users who are on EOS probably won't even touch the constitution or really know about it, which is why I think it mainly needs to concern how major governance structures are in place. And then things around what block producers should and shouldn't do.

Kevin Rose: That's the biggest part. It's what block producers should and shouldn't do. Because we're using depots. I mean it's, it's relatively new. I mean, it's not new, it's relatively new.

Zack: But it's never existed at this scale before.

Kevin Rose: Exactly. But people that are used to proof of work, proof of stake where it's completely permission less enabled for validating node. We need to set the expectation of what these 21 validators are meant to do. What's their job description? This is where his mouth defined. If you read a job description, you're hiring a new blog producer, they just get an incident pass in. When you write the job description, defined what a block producer is and what their role is in the community. And everyone's definition is going to be different, but what's yours.

Miles Snyder: In my opinion, block producers are independent companies that are hired to provide infrastructure as a service. They're hired by token holders to provide infrastructure as a service to the EOS network. And in order to be hired they need to prove that they add value to the EOS community in whatever way it is.

Miles Snyder: So the role of a block producer can kind of be divided into two parts. The first part is just running the infrastructure. So you need to be able to safely, securely, reliably produce blocks, stay synced to all that stuff.

Zack: They love this.

Miles Snyder: I know they're just going crazy. And then the other half of it is whatever you choose to do to bring value to the community and earn votes as a result.

Kevin Rose: Which isn't required.

Zack: So that's my definition also. It's probably very similar to us, but our definition or is that the official definition because there is not an efficient definition.

Kevin Rose: I love the word official when we're using.

Zack: Yeah, who says its official?

Kevin Rose: There is nothing that is official. Except the code that is running and even the different versions of code that's running on blockers will vary. There is no official get hub repo. There was no official central product story for a developer materials or education. Every block producers using their own repo or the main repo or the EOS official repo. So I would say that at the most basic level because prior to launch people debated about what block producers should do. A lot. And there were certain models that they said they should do nothing but produce blocks and well, Miles and I vehemently disagree with that because evidenced by

Rob: I also disagree with that but who are we to say that something's wrong? Well is at the bare minimum...

Zack: It's the voters.

Miles Snyder: Yeah. I was gonna say the market will tell us what a block producer should and shouldn't do. So you have, if you're a block producer and you come forward and said, all we're going to do is produce blocks. We're going to only do infrastructure. We're gonna burn everything that you know that goes beyond our infrastructure costs, something like that. And the voters decided that that's what they want. Well the market will tell you that. But thus far the market seems to be telling us that what voters want, are block producers who can provide good infrastructure but also bring value in different ways, whether that's education, building tools, actually building pads, investing in pads, like all sorts of things.

Rob: But the block producers that were advocating that model, they've abandoned it silently. And I know they have because they started doing those value add tools. Because block producers are the most perfectly positioned in organizations to build products that inherently cannot be monetized.

Zack: I think what we're seeing probably read this something. This isn't mine. I don't know who to credit for it, but the way a depots system works with the block producer community. The block producer community. It's open. I'm not in the block producer community but I'm sort of part of it also because I interact with you guys. I lost my train of thought.

Rob: No you were saying...that someone says.

Zack: I've done this like five times since morning. It's been a long weekend guys. If I don't cut this. Where was I going

Miles Snyder: That you were saying like it wasn't your idea about the block producer community.

Zack: So the block producer community is the result of a depots system and it created this super user. This super EOS fan, and it's like a decentralized group of help desk workers also. So people are constantly coming in to EOS channel or the[inaudible 00:19:54] channel the [inaudible 00:19:54], whoever and they're coming in and asking questions that have nothing to do with you guys. I've seen people come in and ask like, I can't get my transaction and go through and [inaudible 00:20:03] can you help me? And its like you become this help desk. You become this educator and it's super user. It's almost like it was weird at the hackathon to see how you guys, I guess me included because of the show, you've become this cornerstone of the network.

Zack: People are like you're Kevin from [inaudible 00:20:25] you're Miles Snyder, its like they look to you as this expert within the community and it's created. Would people have recognized you if you weren't a block producer?

Rob: He would have been a YouTuber or something.

Zack: I'm not even saying just recognizing you, but people. Super user.

Miles Snyder: But the other thing is that when you look at what Depots does, is it currently, EOS pays, I think the network pays 81 block producers currently and then there's at least another hundred of them who are working, between 81 and 100 who were working for free. And so you've got 100 independent companies all over the world that are adding value back into the ecosystem and they're doing it giving away stuff for free. Giving away like products and services.

Zack: So it is free to the user, but there's a cost to make it and then they're being compensated back by the network.

Miles Snyder: So well, in a way, all the users are collectively paying it through inflation. All the token holders are collectively paying for the of goods and services pro rata through inflation.

Kevin Rose: Last time I checked, it was deflationary in that more tokens are being taken out of circulation into accounts like EOS IO dot names, which is what you pay into when you purchase short names, a ram fee, that kind of thing.

Miles Snyder: There's more than one percent annually.

Kevin Rose: Yeah. There are more tokens in those accounts that are being paid out to block producers.

Rob: As it currently stands.

Miles Snyder: Fewer tokens in circulation now than at launch?

Miles Snyder: So more going into these. They're not being burned. But they're getting put into an account that nobody has access to.

Miles Snyder: and depending on what happens with those, they could be deflationary. Yeah, yeah. Do you remember, do you guys remember when there was a promotion? I think Dan put it forward, but he was like at one point he was like, we might be able to pay block producers in the future based off the renmark. And have zero inflation, but block producers will get paid based off the internal.

Kevin Rose: I think that had to do with the fact that there's no actual direct economic incentive to scale ram out. You don't as a black producer, you're not paid more directly to deploy more ram, but in effect to indirectly are in that. If you weren't able to scale, the idea is you lose votes and that directly equates to money, but I don't remember exactly what the proposal was.

Miles Snyder: I think it might've been one of those things that just got thrown out in telegram as an idea.

Zack: He's good at that.

Rob: He's good at that.

Zack: Yeah. I mean there's so much information out there. It's like you guys' jobs as block producers says it's not...

Zack: I wanna touch on that too. I hope that isn't always the case. I know that it's block producers should be doing it now because there's a void to fill, but the goal is that the knowledge will spread out the different models to be able to make a living while working on this, I think may or be full time. I think that that's kind of the differentiator here is most people who aren't able to dedicate a significant amount of their lives to just following everything that's going on because there's an unlimited amount of things ongoing all the time.

Kevin Rose: You could follow either Miles or myself, our weekly digest and you'll get everything you need.

Zack: I retweet all the good stuff.

Kevin Rose: I'm a twitter addict. I don't tweet that much myself. I just retweet.

Miles Snyder: I actually think that at scale of we're talking like five or eight years down the line, that block producers are gonna be focused a lot more on infrastructure. Just pure infrastructure. Like running data centers, making sure their connections to one another other top notch. But I think right now early in the network, these value ads are so much more important.

Zack: So we're really close to referendum being live. which is going to show that wills and desires of the token holders as a collective group.

Miles Snyder: If we can educate them to know that they should be participating in these votes and educate them to do it in an informed way.

Kevin Rose: There are groups building marketing materials that can be shared easily to start to describe how the process works.

Zack: Let's kind of backtrack just in case someone watching or listening isn't a 100 percent familiar with referendum. Do one of you want to explain what it is and then what the threshold is for a passing vote.

Kevin Rose: So referendum is very simply the ability to solicit opinions from the token holders and block producers to be able to then act on it. There are a number of things right now that black producers won't do very simply because they're unsure of whether or not they should, based on what the stakeholders really want. We're exposed to a vocal minority and I'm assuming it's a minority because there aren't, you know, 500000 people on telegram, although it seems like it's sometimes, but that's pretty much what it is. It's the way that you described before. And what was the other term used? Loosely coupled.

Zack: Loosely [crosstalk 00:25:08].

Miles Snyder: I think that's actually a term that I think we need to credit to have Vitalic Buterin yeah.

Kevin Rose: If we put up the referendum, whether the EOS community or at least everything is, can be like this set.

Miles Snyder: I think we can get 100 percent approval without a doubt.

Kevin Rose: What is this thing? I'm under an umbrella.

Miles Snyder: There's also a little looser than the bucket.

Zack: Yeah I told Max who's behind the camera right now. You say don't have a cameraman. I'm the cameraman. I'm the scriptwriter. I'm the producer. This is great. But I told him we have to, before I published the first thing we recorded, they have to have like a B roll of like the environment as a whole. I think you kind of have to see this whole like warehouse space to get this incident as a.

Kevin Rose: There's a lot of different environments contained within this warehouse. There's a threshold though, is that [inaudible 00:25:59] So for something to be considered past, right, for black producers to say, all right, that's valid we gonna do that. Fifteen percent of issue tokens must state the same way that you would seek for resources. So lock them up to vote affirmative for something and they must continuously remain steaks for 30 days and then there is also a spread between the affirmative and the negatives and it's like a 10 percent is the difference.

Kevin Rose: But actually the way it's written is rather mathematically based. So even amongst the box sounds confusing already. It is confusing, but all you need to know is that you're voting yes or no. And then the tally can happen afterwards and then you can follow up to see what actually happened. But it all happens within a 120 day period if not, it expires.

Miles Snyder: So where do those parameters come from? They come from the constitution, right? Yes. So that's, that's sort of, that was my point earlier, which is, that's kind of one of the useful things that you could get from a constitution is having those parameters and say we decided that, you know, we really should have a 25 percent threshold. Then we update the constitution and then those are the new parameters that we can look to that's useful in the constitution.

Miles Snyder: Saying a user can own more than x amount, totally unenforceable, totally unknowable. Saying everything has to be completely open source, totally unenforceable.

Rob: So my Undergrad, guilty of perjury, so a lot of these roles [crosstalk 00:27:21]every don't do it, but he's going to see game of both. So we're seeing the system networks being pushed to their limits by all these dice and gambling games and we're hearing rumors that they might launch a proxy or there own node...

Kevin Rose: They have a proxy.

Miles Snyder: Yeah they have launched proxies.

Rob: What are your thoughts on this?

Miles Snyder: Dap says [inaudible 00:27:43] approximate not brilliant.

Kevin Rose: I like how you said pads. I think the stigma is that a lot of the most popular pads are not happening with gambling.

Miles Snyder: Hey, Sotoshi dice was what got bitcoin, well Silk Road probably got bitcoin popular in the first place but Sotoshi dice was the first APP to take off on Bitcoin.

Zack: So once referendum is live, what do you think is the first thing that's gonna be passed? The first serious thing, because I feel like there might be like some weird like meme funny things that pass.

Miles Snyder: Oh yeah, there's for sure people are going to put up 100 percent. Absolutely. I would think that the first thing would possibly be the fees for the racks. Because I don't know if we're quite ready in terms of a new constitution to make that decision right after referendum goes live. Also, I would like to see a little bit more time between the time the referendum contract is live tested, ready to go and voting on the constitution. Because voting on the constitution is one of the most important decisions that we're gonna make as a community. And I want to make sure we really educate people about what referendum is, how they participate in it, why it's important before we put that vote to referendum.

Kevin Rose: We have five versions, five competing versions in multiple languages from coming from communities all the world.

Miles Snyder: Let's talk about. So we've got the existing Constitution, we've got blocked ones, proposed Vitu, we've got the EOS New York platform user agreement. We've got the blockhead capital proposal that came out last week and what's the fifth one?

Kevin Rose: EOS Amsterdam, and then also a group of token whole community in Korea. Okay. So more than with referendum.

Zack: So any one in the community can propose to the referendum. Is there a cost to propose?

Kevin Rose: Right now there's not. So the referendum is also not official, right. There's nothing that's official in the US. It is built by people who saw the need to build it and they're putting it together, but they kept it very open ended. So there are no filters, it's just a contract and then the front end UIs have to build around it.

Kevin Rose: So actually that's what they're doing right now as it releases into Beta. So the referendum contracts available in data, but we're not doing anything with it yet. So we have time to build the portals to interact with.

Miles Snyder: So like blocks out io just recently integrated with referendums, wallets, block explorers, mobile wallet as well. I think hopefully I'll start to put this...

Zack: So if I make a proposal to the referendum. Do I have to have code or am I proposing just...

Miles Snyder: Someone's going to make a UI to interact with your contract?

Zack: When I made that proposal, let's say it's doesn't have code yet, it's just basically repurposing and everyone thinks it's a good idea, so the code can be developed, I'm writing the proposal in English, but I need to get a 15 percent consensus to get that. I might need a global scale. Who's translating? Is it my responsibility to translate it?

Kevin Rose: It would be the responsibility of the proposer to get traction for their proposal. If you want change, you gotta fight for it pretty much.

Miles Snyder: And yeah, it probably is going to be up to the proposer to put it in different languages. I mean, I'm sure the community will step in and translate things and stuff.

Rob: It a very proposer to make sense to everyone.

Kevin Rose: I really do think that the first thing that's going to be a past is REX and I just want to touch on what that is for the viewers in case they don't know. So REX is the resource exchange. It's basically a way to try to decrease the stress on the network while making access to resources on the network more available for developers. And you as a token holder can stick your tokens to REX and receive dividends back from the people that are leasing the resources for the [inaudible 00:31:21]

Kevin Rose: That's what's going on. And the thing that we're gonna vote on is that there are network funds. So those EOS IO dot Ram fee, which all the fees that come from ram purchases and sales, EOS IO.names the total number of tokens for people buying the short names, that will also go into the dividend pool. But those no one has the authority to actually move those funds. Yeah.

Zack: So the last time Kevin was on the show is a long time before you even did video is very. We discussed the worker proposal funding, which has kind of had been put on the back burner right now, but it was kind of put on the back burner because I couldn't do anything with it. Even without a referendum.

Kevin Rose: It's kinda time to vote on it. Everybody's made decisions and then they'll go stake a vote.

Zack: So during that discussion, I remembered all of this inflation, there was a forefront. There still is. A four percent inflation that's been occurring since the launch of the main net and the WPS was meant to use that four percent inflation. But you on that discussion said you're of the opinion, incorrectly from wrong, just everything that was accumulated and that four percent pulled, burn it and then start fresh as soon as the WPS passes.

Kevin Rose: Well yeah. I mean it's...

Zack: With four percent inflation?

Kevin Rose: No, no, no, no, no, no. there's this faucet and you don't have to keep it running unless you have a cup underneath, basically is the idea. So if you have a proposal that is past, turn the Faucet on, fund the project turn it back off, you know, it never exceeded a certain threshold. Set that threshold right now it's four percent. But the reason is as really taken back on the back burner, it's just that people, I think they've made their mind.

Zack: If you had to guess, and if it were put to a vote tomorrow, do you think people would pass it or burn it?

Kevin Rose: Block one Dan has said that they will not deploy their capital onto a chain that utilize to work with closer. So I would say that it's probably dead. I hope that it's not because they're a very good use cases for this developer trainings all over the world. We had this discussion, but it is..

Miles Snyder: we could have a whole podcast about WBS.

Kevin Rose: [inaudible 00:33:33] guys already had.

Miles Snyder: We're overdue for another one.

Kevin Rose: So where I tie back in is with the racks. So everyone agrees REX is a great idea but the faucet to the ram trading fees and the name auction fees, I think that and we all agree i think, that'll be one of the easiest things to pass on a referendum.

Zack: Because people will get paid more. Would you like you have to have for additional pieces to that.

Kevin Rose: Those funds are huge right now. What do you do with.

Zack: How do you prorate the distribution? Like I didn't think about that myself. I don't have...

Kevin Rose: I don't think it pulls it all in. I think it just goes in there from then on.

Zack: But then so you burn what's existing?

Kevin Rose: I don't think anything happens to it at all. So we were saying everyone would probably agree to turn the faucet on to put the start pumping those fees into the REX. So would that proposal will include what they want to do with all of the funds sending this savings account?

Rob: I don't think so. I think these proposals should be incredibly simple. Yes or no answers.

Miles Snyder: Specific.

Rob: Yeah. So this is the direct effect of what you're voting for. Interpreted statement to outline it. So moving forward, all the VCs will go to the REX, but we might still have these savings accounts with other money and that'd be a separate referendum.

Miles Snyder: Yeah, yeah. I can get on board with.

Kevin Rose: But the important thing is that we set the precedent that network funds or these decentralized accounts with tons of money in them, not be allowed to be touched without referendum. Block producers should not. They do not have the authority to touch that. We need to establish that precedent.

Zack: So what are you guys' opinions? What do we do it. I can say with pretty good certainty that the community is on board with putting these funds, directing them towards REX. What do you think we should do with these millions of dollars that are still in these accounts untouched. Do you think we should burn them?

Miles Snyder: I think that, I haven't thought about this a ton before, but my sort of gut reaction is that they should be burned. And then starting from the time that we had approved the racks, all the new fees from Ram name options, potentially future internal markets that exist in the future should be out of those books. I think you're going to run into too many complications around how to distribute it as existing funds. But I'm not sticking to that answer. I wanna think about it more.

Zack: Once you decide to burn them, they're gone.

Miles Snyder: Yes.

Zack: While they sit in this account, no one can touch them. But are they at least there? What about you Kevin?

Kevin Rose: I don't know. I don't think that their existence de-values. I know that mathematically it does de root the value, the total value of a network. But I don't think that we're dealing with totally rational markets where that's applying all the time. I could go.

Zack: Very irrational mark it out.

Miles Snyder: Burning funds isn't gonna cause, directly cause the pressure.But sure burn them because I think it's very unlikely we do anything else with them.

Kevin Rose: Knowing just the crypto community and burning them probably would actually do something to the value, but it wouldn't be deserved already lot.

Miles Snyder: It's actually another thing to consider what the worker proposals system because you're not just saying, okay, we're going to have more inflation for the worker proposed system. The idea behind that system at its best should be that the additional value brought to the network by the projects that are funded by the WPS, will add more value to the network than the value that's taken away by the dilution caused that. And now whether or not that's actually gonna be the case is for people to determine.

Kevin Rose: You know, there's a, there's like 12 or 13 block producers that are funding a worker proposal right now. so there's an issue with...

Rob: Are you part of this conversation?

Miles Snyder: I don't think so. [crosstalk 00:37:21] I didn't get the invite. Or it might've been one of the many telegram groups that I haven't checked in a while.

Kevin Rose: I saw it in telegram with this guy, put out a proposal and said I will build this solution and it solves a real problem and here's how much it costs, you know, 12, 13 block producers said, "Yeah, okay, let's do that." And you know, it was not that much, but that's kind of an effect what a working proposal could do. The only problem is that without manual controls over it, without that decision making, block producers deciding yes that's a good thing to back or no it's not. It could very easily be [inaudible 00:37:56] if it's managed by state waiting. Which again we had an entire podcast about that.

Zack: But then again this is a proven stake system and your ownership is proportionate and you know you're. You're say it's proportional to your ownership of the network, that's how it's designed to work. So any other way of structuring the WPS system, could be perceived as illegitimate.

Kevin Rose: We got it back to the WBS somehow. Every time Kevin's on the show, we somehow get back to the WBS.

Zack: I can't believe we haven't talked about this yet, but there was a watershed moment in EOS yesterday, where a majority of black producers, 15 out of 21 voted to abide by an arbitral award issued by Ecaf to change the owner and active and account and revert ownership back to claimants in a dispute over the ownership of said account. That happened.

Miles Snyder: My opinion on this is that the PR damage. So I actually don't agree that this should have been implemented in the first place and I don't think that any single party on EOS should have this kind of authority, but specifically I think that the PR damage to the EOS community that will result from this taking place is going to be far worse than the value that was gotten from a thief being thwarted.

Kevin Rose: Yeah, I absolutely, I absolutely agree. And full disclosure, we signed it. We took a couple days to do it. And you know, there's two sides of this for us. The first is we want block producers to be predictable. We wanna know that they're not going to throw out the process however under developed is whenever it suits them. So that's why we signed it and despite our personal opinions about it. But beyond that, this is an under developed system. Ecaf is directly damaging the EOS ecosystem. It should be removed.

Miles Snyder: Absolutely.

Kevin Rose: And I, and I have a tremendous amount of respect for the volunteers who have been running it, but they're voluntary.

Zack: Look how you look him into the eyes.

Kevin Rose: Because I want you to see in my eyes I'm being genuine. They are volunteers. But it's time to lay it down.

Miles Snyder: I totally agree with Kevin and I can sort of talk about this and give my opinion without having to have been in the position that you guys were in, which I, you know, I understand that that was a tough position and I totally understand your reasoning that. I think what's important is that we realized that this is an issue and we as a community fix it. Ecaf, What it does is, in my opinion, it kind of breaks the security model of depots. Because depots is designed to have...

Kevin Rose: A cheat code.

Miles Snyder: It really is. It's designed to have distributed control among all these different block producers and if you were trying to attack EOS and you went after a block producer, well it's not gonna do anything because the system is literally designed to withstand that.

Kevin Rose: It's anti-fragile.

Miles Snyder: It's anti-fragile. So you have all these differences in all these different parties and if you attack any one of them, then nothing happens to the system as a whole. What Ecaf does is it creates a single party within this network that has supposedly binding decision making.

Kevin Rose: It's like executive power that...They don't go out and try to exert influence over someone or something that hasn't been requested it. So that's important and they are trying to decentralize themselves by having their arbitrators elected or rather affirmed by the community and they've done none of that. They've made no improvements or any attempt to communicate with the community.

Miles Snyder: Most people don't know who is behind Ecaf what they do. If you reach out to Ecaf for a case, you get an email back and you know, I've actually to people who have gone through this process and they had to reach out to other block producers and other people to say we don't know if we're getting scammed or not because they asked us to make a deposit and we can't tell if this is actually from ecaf because we don't know who the arbitrator are.

Zack: I think a big part of this is compensation. So when you said earlier that they did get compensated for solving, they would get compensated for solving a case. They get what? A percentage of the big standard fee schedule they have a facebook page. So if I wanted to have an RFA that in case I have to put money forward, even if I was wrong, what if I don't have money?

Miles Snyder: Well then you can't do it. The other thing is that. Here's the other thing, and I think it’s... I read all six pages of the report that they put out. So in this particular case, someone had their keys fished from them as they moved from their ERC 20 EOS to the EOS main net. And so they brought a case to arbitration. And in some instances of arbitration, if you successfully arbitrated against someone and win that case, that person should pay your arbitration fees. However, in this case, what happened was, that a person who claimed ownership of an account and they were unable to get in touch with the person on the other end of that account currently holding the keys because it accounts on EOS are synonymous. So what did they do? Well, they put out an announcement on the ECAP website saying, we're going to rule on this account expecting that maybe the person would come across it, they didn't.

Miles Snyder: And then they sent some memos to that account. Now this person could be on vacation somewhere so they can be not paying attention to their memos. Maybe they haven't checked their EOS in a while, whatever it may be. And so as a result, one, they never got any input from the counterparty and two, that party who was successful arbitrated against who in most cases should have to pay the arbitration fees. Well, they didn't. They weren't around to pay them. So the person who initiated the case...

Kevin Rose: it doesn't make any sense, and even if it is clear as day, my voice started to go, even if it is clear as day, this person was scammed. This cannot scale, nor can you arbitrate theft past accounts that were created in genesis. Because there's nothing to connect the two. The only reason why this works is because they can point saying, look, they have ownership of the ethereum of registered address associated with the EOS. Beyond that it's never gonna happen.

Miles Snyder: So I think it's really, really important for people to consider one point, which is that at the end of the day, EOS it's got a lot of cool features that can make it really great for users, but it is a public blockchain. And so the only way that a public blockchain can objectively prove of ownership is through the ownership of a private key. Public key cryptography. If you wanna prove that you own an account, you have to control that private key and the protocol can only prove ownership in that way because it's the only objective way. Any other way of trying to determine who controls the account is totally subjective and it doesn't scale.

Rob: So I think what's interesting is this like it's like some stuff about arbitration, Ecaf we hate other things and whenever that reversal occurred it was celebrated.

Miles Snyder: Not by us.

Kevin Rose: By some. But not [inaudible 00:44:37]guys. The people that were celebrating it, are tone deaf. So whenever I say I keep going back to compensation because I have never really dug into Ecaf too much. I don't think I'm the only one that like this black hole where people know they exist.

Miles Snyder: I've dug in but it's a black hole.

Kevin Rose: So when we get to compensation so they get compensated for taking a case. One of the big issues is that you guys saying that the block producers role is to educate the community and then you also stated that Ecaf's done a very bad job at explaining what their role is or how they're elected or what they do. Where does that budget come from? Who's job is it for...

Miles Snyder: The way arbitration should work is that there shouldn't be. So the way that arbitration is structured right now with Ecaf as the default arbitrator, is kind of like a state run service, like that's the analogy you can compare it to. So it's like an underfunded state run bureaucracy. And what we really should have is a free market for arbitrators that are opt in. So Ecaf can be one arbitrator, Materium can be another, Deloitte can be another, and you can have, as users say, if we're gonna do business on the blockchain, we're gonna opt in to using Deloitte as our Arbitrator.

Zack: By default, you have no arbitrator. So you have no rights. If you get scammed, you get scammed.

Miles Snyder: Because you chose to take on that risk.

Zack: So it comes down to the UI of the wallet provider. To make it easy to opt into this.

Miles Snyder: Yes. And in the future, most users are going to either use a third party custodian or if they do choose to self custody, they're gonna have to take on those risks. EOS has amazing features on the back end, like the owner key and active key and account permission system and delayed transactions and...

Kevin Rose: Trusted friend, trusted account recovery.

Miles Snyder: Trusted account recovery, there's amazing features that can allow us to make EOS the most user friendly blockchain in history without an arbitrator at the baseline.

Kevin Rose: The most safest. I don't know if it's user friendly yet but we're working on it.

Miles Snyder: Right now it's the most user friendly I think.

Kevin Rose: I would say. S

Miles Snyder: But it's the safest.

Zack: So who, who we're limited on time, limited on time slots. But whose role is it to, for, to educate the community on the Ecaf?

Kevin Rose: There's no one to better positioned than Ecaf themselves. I've taken it upon myself to dive into this because at launch there was the fumble of block [inaudible 00:46:53]in Ecaf abdicating their responsibility to handle all of that. And so that's why EOS dearc has put out a number of proposals to what Miles was discussing about free market arbitration to be able to like have B to B, B to C contracts and explicitly consent to arbitrating any kind of dispute. But it should be Ecaf but they're not doing it.

Zack: So how do we change it? Is referendum the solution?

Miles Snyder: I think referendum is the solution because the solution is to adopt a new version of the constitution that does not include Ecaf. Ecaf's authority as it stands right now, comes from the fact that in the constitution that was included at main net, they were listed as the default arbitrator. Version two of the constitution that we adopt as a community should not include a default arbitrator and we're gonna put out a lot of educational materials specifically about this subject 'cause we feel really strongly about it.

Zack: So I don't even know what time it is. I don't have a clock, but I do know we do have to sits with the schedule. This is fun. Is there anything else you guys want to kind of say that you guys are doing?or wanna let anyone know before we kind of wrap up.

Kevin Rose: Sure. We're working on a hardware wallet. It's gonna be the most easy to use, user friendly, EOS dedicated hardware wallet for use with pads. Just going right into the commercial here. And it'll be. We're aiming for February to release it and we're going after ledger in terms of usability.

Miles Snyder: Awesome. Super excited about. For us, education has always been our main focus and specifically now that we have the referendum coming online, we're gonna take a really focus on education around governance specifically. So if you guys are interested in learning about some of these issues and going a little more in depth on them, come to our website auroraeos.com and you can find all the ways to reach out to us. And let's get you involved.

Zack: This was fun guys. This is basically, if we're over there talking, we probably would have had this same conversation.

Miles Snyder: Probably.

Zack: And that's literally how this podcast got started. When we started this podcast, Rob still owned and worked with me at ICL and we literally sat next to each other and we would just talk about this kind of stuff all the time.

Kevin Rose: You were like we should this.

Zack: We should record this. That's what this turned into. So I hope everyone watching and listening enjoyed it. I think this should just be a recurring thing in conferences.

Kevin Rose: Absolutely.

Zack: Yeah. I think it's cool because it's unique. It's more flexible than what a panel discussion would allow.

Miles Snyder: Yeah.

Zack: And it's really just conversation.

Miles Snyder: And there is conversations that I have here that I'm like, it would be cool for the community to like even all standing over here, two other block producers talking to [inaudible 00:49:28]. Wow. It'd be great for the community to hear this conversation because it's important.

Zack: All right, round of applause I guess.

Miles Snyder: Great.

Zack: Thanks for watching and listening.

Miles Snyder: Thanks.

Kevin Rose: Thanks everybody.

Topics: Blockchain, Podcast, Eos, Blockchain Technology, Podcasting, Everything Eos, Hackathons, Governance, Aurora