Ive been a long term XDC community member and I've been observing the progress of the XDC Network, even when it used to be called XinFin Network. This proposal is amazingly put together but what I fail to see and I hope this gets integrated, is the fact that funding for this DAO will come from somewhere. Based on the proposal, the ecosystem fund will be funding all these projects wanting to get funding for their projects and any future development of the network. The DAO (Senate, House and Judiciary) will determine how the funds get allocated, but who will be in control of the actual funds?
What I am suggesting is to put the ecosystem fund in a smart contract where the funds are controlled by automation vs a team of people because that will not be decentralization. Putting the ecosystem fund in a smart contract will allow to release funds in a predetermined timeline (monthly, quarterly, yearly etc). This way the DAO can truly have oversight of the funds being released. Just as suggested by the proposal, if the funds are not spent, then they can be locked again in the smart contract. This way, the funds are truly decentralized by the smart contract and the actions taken by the DAO will also be decentralized because it will be the community represented by everyone voting on such proposals.
This will also allow transparency in the way that anyone interested in seeing how the ecosystem funds are being spent can take a look and be satisfied that funds are being utilized for the growth of the XDC Network and not one single group or entity can deny access to the funds if the DAO votes in favor of X or Z project. This will also place the power to the DAO without having to rely on a single entity because, let's be honest, this will not be a decentralized network otherwise.
Once the smart contract is set up to distribute the funds, the funds can be deposited into a multisig wallet that will require at least a few people (2 of 3 signatures) to disperse funds to a project. Each signature can be: 1 for the House, 1 for the Senate and 1 for the Judiciary team.
I truly hope for the best to the entire XDC Network and the progress to a truly decentralized network.
Great points. So, thus far, the focus has been on developing the plan - questions about execution, including how to custody and release the funds, will be taken up only once the plan has been finalized. For now, I'll just say that there's a lot to think through here. Smart contracts sound great in theory, but they carry significant risks, and can actually scare off regulated entities. Putting the whole treasury into one wallet controlled by a single smart contract would be bad OPSEC, as, in that case, there'd be one single point of failure and, as we all know, smart contracts fail (i.e., get hacked/manipulated) pretty regularly. Just imagine billions of XDC suddenly in a hacker's possession! Now, to be clear, I'm not against the idea of stuffing the whole treasury into smart contracts; I'm just saying it's not nearly as easy as it sounds. But note, regardless of whether the treasury is ultimately controlled by multi-sig or by smart contracts, all fund movements will be visible on the blockchain for everyone to see. So you'll have perfect transparency no matter how the custody question is ultimately answered. That said, whatever happens at first, I do agree that the end goal should be automation wherever possible.
I respect the points that you bring, but who's to say that the funds will not get hacked where they are currently being held. The smart contract can be executed while maintaining the funds in a secured custody solution that offers insurance in case of hacks. Anything is hackable with the proper amount of effort and time, so the excuse of smart contracts are hackable does not solve the issue of one entity controlling the funds. How is it possible that other foundations (ETH for example) is able to keep their funds secured with so much more transactions and volume on their network? Because it is possible to achieve what I am suggesting. Let's see how this plays out but if we truly want the XDC Network to be decentralized, the way things are the moment is not decentralized and the DAO will be just a front of decentralization while the actual funds are controlled by a handful of people. All my comments come from a good place because I do want the XDC Network to be successful.
Luna Nightingale is a seasoned cryptocurrency investor and advocate. She has been active in the cryptocurrency space for several years, and has built a reputation as a knowledgeable and savvy investor
Ive been a long term XDC community member and I've been observing the progress of the XDC Network, even when it used to be called XinFin Network. This proposal is amazingly put together but what I fail to see and I hope this gets integrated, is the fact that funding for this DAO will come from somewhere. Based on the proposal, the ecosystem fund will be funding all these projects wanting to get funding for their projects and any future development of the network. The DAO (Senate, House and Judiciary) will determine how the funds get allocated, but who will be in control of the actual funds?
What I am suggesting is to put the ecosystem fund in a smart contract where the funds are controlled by automation vs a team of people because that will not be decentralization. Putting the ecosystem fund in a smart contract will allow to release funds in a predetermined timeline (monthly, quarterly, yearly etc). This way the DAO can truly have oversight of the funds being released. Just as suggested by the proposal, if the funds are not spent, then they can be locked again in the smart contract. This way, the funds are truly decentralized by the smart contract and the actions taken by the DAO will also be decentralized because it will be the community represented by everyone voting on such proposals.
This will also allow transparency in the way that anyone interested in seeing how the ecosystem funds are being spent can take a look and be satisfied that funds are being utilized for the growth of the XDC Network and not one single group or entity can deny access to the funds if the DAO votes in favor of X or Z project. This will also place the power to the DAO without having to rely on a single entity because, let's be honest, this will not be a decentralized network otherwise.
Once the smart contract is set up to distribute the funds, the funds can be deposited into a multisig wallet that will require at least a few people (2 of 3 signatures) to disperse funds to a project. Each signature can be: 1 for the House, 1 for the Senate and 1 for the Judiciary team.
I truly hope for the best to the entire XDC Network and the progress to a truly decentralized network.
Godspeed!
Great points. So, thus far, the focus has been on developing the plan - questions about execution, including how to custody and release the funds, will be taken up only once the plan has been finalized. For now, I'll just say that there's a lot to think through here. Smart contracts sound great in theory, but they carry significant risks, and can actually scare off regulated entities. Putting the whole treasury into one wallet controlled by a single smart contract would be bad OPSEC, as, in that case, there'd be one single point of failure and, as we all know, smart contracts fail (i.e., get hacked/manipulated) pretty regularly. Just imagine billions of XDC suddenly in a hacker's possession! Now, to be clear, I'm not against the idea of stuffing the whole treasury into smart contracts; I'm just saying it's not nearly as easy as it sounds. But note, regardless of whether the treasury is ultimately controlled by multi-sig or by smart contracts, all fund movements will be visible on the blockchain for everyone to see. So you'll have perfect transparency no matter how the custody question is ultimately answered. That said, whatever happens at first, I do agree that the end goal should be automation wherever possible.
I respect the points that you bring, but who's to say that the funds will not get hacked where they are currently being held. The smart contract can be executed while maintaining the funds in a secured custody solution that offers insurance in case of hacks. Anything is hackable with the proper amount of effort and time, so the excuse of smart contracts are hackable does not solve the issue of one entity controlling the funds. How is it possible that other foundations (ETH for example) is able to keep their funds secured with so much more transactions and volume on their network? Because it is possible to achieve what I am suggesting. Let's see how this plays out but if we truly want the XDC Network to be decentralized, the way things are the moment is not decentralized and the DAO will be just a front of decentralization while the actual funds are controlled by a handful of people. All my comments come from a good place because I do want the XDC Network to be successful.
Noted, and appreciated! We'll be looking into all this very closely.
I reckon this is a solid idea. If the funds aren't under the control of the DAO, then it ain't really decentralized, is it?