Select Page

RFC: Proposed Text for New Telos DeFi Instrument

by Douglas Horn

The recent Telos RFC: Creating an Innovative New DeFi Instrument to Bring New Exchanges to Telos generated strongly positive feedback from the Telos Community along with several suggestions, questions, and comments. Following this community feedback, I have created a proposed text of a Telos Amend proposal to implement this initiative. Please review the following proposed clauses to the Telos Blockchain Network Operating Agreement (TBNOA).

Clause 23 is a revision of the existing clause which would allow funds collected from the TLOS Recovery process (completed December 30, 2019) to be used to create bond-like NFT-controlled holding contracts for discounted sales of locked TLOS tokens for the purpose of allowing more funds for TLOS exchange listings and to delay the sale of large amounts of TLOS tokens earned by the Telos Foundation, Worker Proposal recipients, Telos Core Developers, and Block Producers.

Clause 50 is a new TBNOA clause that describes the methods and processes of allocating these funds. There is an added proposal that once the TLOS price remains over $2.00/TLOS for 30 days without interruption, this TLOS Recovery account will stop selling new NFT bonds and send all remaining funds in TLOS Recovery to the Exchange Reserve Fund. The rationale for this is that once TLOS reaches this price consistently, the funds that were needed to expand exchange onboarding will have done their job. Of course, this can always be modified (either way direction) by a community-voted Telos Amend proposal, but I believe that anything meant to be a temporary measure should have some form of sunsetting built into it, even if there may be changes later.

Please review the proposed amendments for community discussion. Once a consensus emerges, I will make any broadly supported changes and then officially submit the Telos Amend proposal for voting.

23. Requirement to Opt-in as a Member
The Telos Initial Distribution will include all accounts from the EOS Snapshot. However, it is unknown which EOS Snapshot account owners may wish to opt in and become Members of the Telos network. Because all token holders must agree to become Members by accepting the mutual representations of this Agreement, accounts that have no transactions 63,000,000 blocks (approximately 365 days) after the activation of the Telos network are subject to deletion or nullification by the Block Producers at that time or in the future, provided no transactions have yet been made. Tokens in any deleted or nullified accounts will be removed from those accounts and deposited in the TLOS Recovery account named “tlosrecovery”. Funds may be drawn from this account by a 2/3+1 vote of the Block Producers solely for the purposes and in the manner described in Clause 50 “TLOS Sold as Delayed-release Non-fungible Tokens”.

50. TLOS Sold as Delayed-release Non-fungible Tokens
TLOS tokens held in the TLOS Recovery account named “tlosrecovery” may be allocated by the Block Producers to an account designated to collect TLOS tokens for sale via smart contract-controlled delayed release, either in regular increments or at the maturity date of the holding period. These funds may be sold at a discount on a public market available to any Telos Member in the form of a non-fungible token (NFT) holding contract that controls the timed-release and ownership of the TLOS and which may be further sold on a secondary market. The entire face value amount of the sale shall be transferred from the TLOS Recovery account to the control of the NFT contract account upon sale. The holding term and discount rate offered to the original purchaser Member shall be determined directly by or via a smart contract deployed for this purpose approved by a 2/3+1 vote of the Block Producers. Funds paid for these NFT-controlled TLOS shall be held in the TLOS Recovery account or another account designated for this purpose and in a form (e.g. BTC) by a 2/3+1 vote of the Block. Funds in the Telos Recovery account may be used solely for the purposes of: a) Paying exchange listing and related required fees approved by a 2/3+1 vote of the Block Producers; b) Paying or providing liquidity or market-making fees to ensure reasonable trading liquidity of TLOS tokens as determined by a 2/3+1 vote of the Block Producers; c) Exchange for TLOS received by the Telos Foundation, Telos Core Developers, Economic Development Fund, Block Producers and Standby Block Producers as block producers pay, or Worker Proposal System recipients for the purpose of delaying large sales of TLOS on the open market when approved by a 2/3+1 vote of the Block Producers. All TLOS and other token prices shall be determined by the Telos on-chain token price oracle at account “delphioracle” or at some other Telos price oracle approved for this use by a 2/3+1 vote of the Block Producers. Prices for sales occurring without requiring a Block Producer approval vote shall be based on the most recently reported oracle price prior to execution. Prices for sales requiring a Block Producer approval vote shall be based on the most recently reported oracle price as of the creation of the Block Producer voting multi-signature transaction which shall expire within 48 hours of creation if not previously executed. Once the public price of TLOS on the approved Telos price oracle exceeds $2.00 US dollars for an uninterrupted period of 30 days, all unallocated TLOS tokens in the “tlosrecovery” account will be sent to the Exchange Token Reserve Fund account named “exrsrv.tf”.

Telos Governance Offers Protection Against Exchange Takeover

Telos Governance Offers Protection Against Exchange Takeover

by Douglas Horn

Today, the STEEM blockchain was apparently taken over by an unprecedented coordinated attack led by Tron’s Justin Sun and the centralized exchanges Binance, Poloniex, and Huobi. What makes this more egregious is the fact that the tokens that the exchanges used to enact this hostile takeover of the chain were owned by their customers and further, these exchanges locked up these customer tokens for 13 weeks in order to gain this power. Customers who entrusted their tokens to these exchanges will not be able to withdraw them for some time.

As a result of what appears to be a startling breach of trust, there is concern in the communities of other blockchains using Delegated Proof of Stake (DPoS) that such hostile takeovers could also occur there as well. To allay fears that such a situation could occur on Telos, I’d like to discuss how the existing Telos governance actively protects the chain from a centralized exchange takeover.

Telos governance is defined by the Telos Blockchain Network Operating Agreement (TBNOA) and other governance documents. (View at tbnoa.org) The Telos developers and block producers built tools and practices founded on these documents.

Exchanges cannot vote customer tokens

The first protection that Telos has only beneficial owners of tokens can vote them. This is spelled out in Clause 21 of the TBNOA:

Only a token’s true beneficial owner or a voting Proxy recorded on the blockchain may vote tokens. Any Member holding tokens in trust for another beneficial owner, such as a centralized exchange, may not cast votes for or assign to a Proxy such tokens.

Exchanges do not have the right to vote TLOS tokens owned by their customers. The Telos block producers have made each exchange listing TLOS aware of this rule and to date, each exchange has understood this and has not voted any tokens. Of course, that was the same situation with these exchanges on STEEM, so a document alone cannot be relied upon. The Telos block producers have additional tools available.

Preventing sock puppet delegate nodes

DPoS chains are operated by validator nodes that are empowered through the delegated votes of staked tokens on their chains. On STEEM these delegates are called Witnesses and on Telos, Block Producers, but they play essentially the same role. Once voted into power, these delegates can perform a wide variety of actions by a supermajority vote of about 67%. However, it requires a number of delegates and to pull off a coordinated attack requires these delegates to be controlled by the same organization or colluding organizations.

The attack on STEEM required not just the large majority of staked token votes, but also collusion from 20 witness nodes. Each of the witness nodes that took part in the STEEM takeover was newly registered in in February 2020 and were quite obviously colluding.

Aware of this potential exploit, Telos governance addresses it in a number of ways. First, Telos block producer organizations must identify their owners. Further, no one may own any part (5% or more) of more than one block producer. This is documented in the Telos Regproducer Agreement (Clause 17) that each block producer signs as part of registration on the network. Telos block producers are also not permitted to collude (Clause 11).

Further, the Regproducer agreement (Clause 13) requires compliance with the Block Producer Minimum Requirements, one of which is to produce blocks for at least 7 days on the Telos testnet before registering on the Telos mainnet as a block producer.

Together, these rules and requirements mean that it is very difficult for new block producer to come onto the network without being scrutinized for compliance. All current block producers have followed these rules and the small number of block producers that failed to comply were removed by the prescribed enforcement actions. Block producers who have not met the 7-day minimum requirement on testnet are typically removed or self-remove when they discover this until the requirement is met. This becomes a crucial first opportunity to notice and engage with potential bad actor block producers. During this time, block producer candidates are required to disclose their ownership and show compliance with all other requirements. This creates an opportunity to search for signs of co-ownership across entities. If signs of this arise, further scrutiny is brought. In the past, the Telos block producers have removed candidates due to strong evidence of single entities owning more than one block producer. Once removed, these nodes are kicked from the network for an amount of time prescribed in the Regproducer agreement.

In order to execute a network takeover of Telos, at least 15 coordinated new block producer candidates would need to be brought onto the network, which is highly unlikely given that the Telos governance rules give block producers time, authority and mechanisms to assess new block producers for signs of co-ownership or collusion and react before an attack could be carried out. If an attacker instead chose to acquire or coerce existing block producers to be complicit in the scheme, there is a high likelihood that at least one would reject such overtures and alert the other block producers.

Telos tokenomics

Telos launched with a flat economic token distribution compared to most cryptocurrencies. Despite some subsequent large acquisitions by a few accounts, the distribution remains enviably egalitarian. This contributes to a voter base of small accounts that determine the Telos top 21 block producers. The top eight Telos block producers each have more than 64 million votes. To break 15 new nodes into the top 21 block producers, therefore, in addition to onboarding these block producers without revealing their collusion and/or co-ownership, an entity seeking to take over Telos would need to control the voting of at least 64 million TLOS. However, Telos has one of the lowest token supplies among DPoS chains, with just 355,208,371 tokens of which 114,002,154 are currently liquid (of which 66% are stored in REX for 15.7% staking rewards). High REX staking rewards have proven to be an effective method of limiting the amount of TLOS available for exchange.

An attempt to purchase the 64 million TLOS would require an attacker to quickly deplete all TLOS sell orders on every exchange without coming anywhere near the goal. These and further purchases would certainly drive the price of TLOS token up significantly and the rapidly increasing price and ensuing FOMO would further increase this price runup. It is difficult to calculate the cost of acquiring essentially 60% of the available TLOS tokens, but it would be an expensive venture and one likely to rouse interest within the community.

Large voter coordination

While Telos is a highly decentralized blockchain without collusion, in the face of an overt attack, key stakeholders in the network could be expected to work together for a limited time needed to fend off the overthrow. Like many chains, some of the larger token holders on Telos are the original launch group and current block producers who already have strong working relationships that would prove to be an asset in a time of attack. In addition to the other channels of communication that they use, Telos block producers must all provide working emergency telephone numbers and email addresses as a minimum requirement and these are checked periodically to ensure general compliance — so coordination could be swift. While the stake of large TLOS holders is proportionately small compared to many more centralized chains, they are adequate to temporarily present an even more formidable front against takeover once alerted to this rise in centralized token ownership and the appearance of 15 new block producers. This would most likely be expressed in shoring up the stake of block producers lower on the top 21 list. Factoring in this temporary coordination of large holders and proxies the amount of TLOS needed to control the network is likely to be even higher than 64 million.

Network destruction attempts

Finally, we must consider that the aims of such a hostile takeover might be to destroy the chain rather than to seize control. This can be accomplished on a DPoS blockchain by gaining control of about 38% of the active block producers. On a chain like Telos or EOS with 21 block producers in the schedule at any time, this requires eight colluding block producers to get into a position of be in the top 21 and then destroy their signing keys in a coordinated move over a short period of time. Telos is designed to remove block producers that do not produce blocks over about a two hour period so all eight would need to destroy their keys prior to any of them being kicked for missed blocks. Without recovering at least one of those eight signing keys, the chain would not be able to move forward and its current form would become nonviable.

Telos would, of course, use all of the aforementioned protections to prevent this. There is a significant disincentive for anyone to perform such an attack as they would need to purchase nearly the same amount of TLOS tokens needed to take over the network with 15 block producers, but they would destroy all value they had invested in the process.

Following such an destruction of the network, the remaining Telos block producers would have the ability to revert to their most recent common backup state that did not include all eight malicious block producers. These backups occur regularly on Telos and would likely occur on a rolling basis every 5–10 minutes once the chain was alerted to a scuttling attempt. The outcome would likely be that the non-colluding block producers would roll back the chain to a state not long before the previous chain was destroyed. All transactions would be retained except for the brief period between the last backup and the attack. The block producers would then likely fork off a new chain at this point, zeroing out the balances of the colluding block producers and all those that voted for them at the time of the attack as a penalty. (This would probably first occur as a freeze of these accounts pending an arbitrator action under the Telos Resolve dispute resolution process.) As such, the effects of an attempt to destroy the Telos network would be short lived and come at a high cost to the attackers.

Conclusion

I hope that this explanation of some of the protections built into Telos governance can ease concerns among the Telos community about an attack such as the one that occurred today against the STEEM blockchain. Of course, the greatest protection offered by the Telos governance system is the ability for the highly engaged Telos community to propose and vote to adopt changes to the operations or governance of the chain and adapt to such threats. This gives Telos unparalleled power to protect itself while maintaining decentralization and participatory governance.


About the author: Douglas Horn is the Telos architect and whitepaper author and a Telos core developer. He is the founder of GoodBlock, a Telos block producer and blockchain development company currently releasing the dStor decentralized data storage system.

For more Telos related news: 
telos.net

Blockchain Governance Advances to the Third Generation

Blockchain Governance Advances to the Third Generation

by Douglas Horn

Governance is an important field of growth for the blockchain industry. New developments have advanced the state of the art of blockchain governance to a crucial third generation distinct from previous advances. Third-generation blockchain governance is characterized by a high degree of protocol-level, participatory governance that is extended to dapps and DAOs deployed on the blockchain as well.

Third-generation Blockchain and Governance

To date, the term, third-generation, in blockchain has referred to the blockchain protocols themselves. In this model, Bitcoin is a first-generation blockchain based on proof of work consensus; Ethereum is a second-generation blockchain which adds the ability to run smart contracts but still uses proof of work; and EOS and Tron are third-generation blockchains using delegated proof of stake consensus mechanisms to allow much greater speed, capacity, and computing power for smart contracts with ease of use features such as simple account names and no transaction fees. However, with recent advances in blockchain governance tools and protocols, blockchain governance, itself is now entering a third age.

The three generations of blockchain governance are:

First-generation governance (e.g. Bitcoin): The blockchain is governed by its protocol to ensure that blocks and transactions are valid. The process of updating those protocols, however, is an off-chain process.

Second-generation governance (e.g. Tezos): The blockchain’s protocol applies to validating blocks and transactions but also includes an on-chain method to update the protocol, itself.

Third-generation governance (e.g. Telos®): The blockchain’s protocol provides methods for validating blocks and transactions, for updating the protocol and other governance functions, and extends these protocol-level governance functions to dapps an DAOs deployed on the blockchain as well.

The Evolution of Blockchain Governance

The history of blockchain governance has largely been about simply ensuring that all transactions are valid. This is still the case for the vast majority of blockchains. Many bitcoiners take pride in the fact that math alone determines consensus. However, this approach ignores the very real need to update the protocol or blockchain source code from time to time. With first-generation governance, this process generally occurs off the chain with developers setting a direction and deploying new code. Most users and miners have little input on what is included or excluded from the new code. Mining pool operators may decide whether or not to support new protocols and miners may decide whether to support the decisions of these pools by directing their hash power to them, but this is the extent of participation.

In a situation where there are two protocols that could be selected (old and new), the one that receives the greatest amount of hash power will be deemed the valid one and the other option either withers or becomes an alternate coin, such as the Bitcoin and Bitcoin Cash split of August 2017. End users only “vote” with their economic involvement: they can buy tokens they like and sell those they don’t. The outcome of first-generation governance for blockchains is often slow and divided development efforts, disconnection of general users from the ongoing development, and occasionally contentious forks when projects have no inclusive method for determining the direction of the project.

With the advent of second-generation governance, blockchain projects incorporate into their protocols methods to modify the protocols, themselves based on some on-chain selection criteria. Second-generation governance blockchains provide ways to iterate on the blockchain’s very design based on determinations made on the chain itself, such as voting. Tezos was one of the first blockchains to incorporate second-generation governance in September 2018 by allowing users to vote on proposed code changes with the winning code automatically updating the chain’s protocol. Second-generation governance allows communities to better determine the direction of a project so that they can avoid contentious splits or divided development efforts. In turn, it allows continuous iteration of protocols, empowering faster evolution and adaptation.

While second-generation blockchains promise important advantages, these are limited to the operation and iteration of the chain, itself. Third-generation blockchain takes this to a crucial new level by extending the protocol-level governance features to dapps and DAOs (Decentralized Autonomous Organizations) deployed on the blockchain, meaning that a wide array of dapps and DAOs can incorporate common tools from the chain, itself, to govern their own operations and development.

Third-generation governance greatly empowers dapps and DAOs to be managed by their users without relying on an entrenched set of developers or leaders. As important as core blockchain protocols are, dapps and DAOs are how the vast majority of future users will interact with blockchain technologies. These dapps have the same needs to evolve and adapt, to maintain cohesive user communities, and to focus development resources as blockchains do. More so than the underlying blockchains, in fact because dapp resources are generally more limited than those of the underlying chain. By extending protocol-level tools maintained and advanced by the chain’s core developers, and adopted by the chain’s users via governance tools, blockchains with third-generation governance allow the dapps and DAOs deployed on them to more rapidly advance than dapps attempting to incorporate governance tools through their own ad hoc development efforts.

Third-generation Governance on Telos

The first blockchain to incorporate third-generation governance is Telos®. The Telos mainnet launched in December 2018 as a third-generation blockchain based on EOSIO with second-generation governance. Telos incorporates a number of advanced governance features including the election of validating nodes, allocation of work proposal system funds via Telos Works, dispute resolution with elected arbitrators via Telos Resolve, and the update of the Telos protocol, itself, based on user votes and controlled entirely by on-chain smart contracts via Telos Amend.

An update to the underlying Telos governance functions has now extended all of these features to dapps and DAOs on Telos via a suite of governance tools called Telos Decide™, which are maintained by Telos core developers at the protocol level.

Telos Decide offers dapp developers a number of types of voting for ballot initiatives and elections, and committee building and management functions. All functions are highly configurable for things such as voting quorums and passage thresholds, terms of office for elected positions, and voting powers and requirements for committees. The tokens used to empower these governance features are also highly configurable, allowing divisible, transferrable tokens that serve both governance and economic functions, to limited-use tokens solely for governance that cannot be transferred or divided — and many possibilities between. For DAOs, Telos Decide will also soon offer modular tools for proposing and voting initiatives that have specific smart contract transactions triggered by their outcomes. (Alpha versions of these can be previewed at app.telos.net.)

While projects like Aragon have previously enabled the creation of configurable DAOs controlled by smart contracts, they were generally standalone dapp projects themselves with no connection to the underlying blockchain protocols and governance tools. Telos takes this to a new level, which allows a greater set of common programming standards and user interfaces due to the common programming interface. This will greatly unlock the potential of dapps and DAOs to govern themselves and adapt to issues that may have been unforeseen at the project’s outset.

The Future of Third-generation Governance

While Telos is the first blockchain to create third-generation governance, it’s unlikely to be the last. Dapp developers understand the many advantages of self-sovereign, participatory governance as a way to build and maintain community, and to adapt and iterate based on the decisions of the users. Dapps are decentralized applications and to be truly decentralized, they must not be reliant on a small group of founders or developers for their decision-making and growth. Chains with third-generation governance features offer the dapps and DAOs built on them with the ability to fully deliver on this decentralization using common tools that all developers and users on the chain can quickly become familiar with using.

To learn more about Telos third-generation governance features, there is a Telos Governance Reference article and a Github repository of Telos Decide features.

###

About the author: Douglas Horn is the Telos architect and whitepaper author and a Telos core developer. He is the founder of GoodBlock, a Telos block producer and blockchain development company currently releasing the dStor decentralized data storage system.

Telos Sets the New Standard in Blockchain Governance

Telos Sets the New Standard in Blockchain Governance

by Douglas Horn

The Telos® blockchain has provided leading governance features since the project launched its mainnet in December 2018. However, recent upgrades by the Telos Core Developers have catapulted Telos governance ahead of every major blockchain project by not only providing powerful, participatory, smart contract-controlled features to the Telos blockchain itself, but by seamlessly integrating these chain-level tools to any dapp deployed on Telos to easily adapt for their own governance needs. This suite of tools, called Telos Decide™, allows any dapp or group to easily incorporate decentralized governance features such as initiative ballots, committee or custodian elections, and committee management with highly configurable ballots that can trigger smart contract actions upon completion, such as assigning control of accounts and funds, performing transfers, setting configuration parameters, or managing permissions.

Participatory blockchain governance is valuable because it allows a project to rapidly evolve and adapt based on the priorities of its members. The most often cited advantage of this is that it prevents communities from splitting based on unresolved divisions in priorities by various subgroups. The ability to transparently poll a project’s community does, indeed, serve this purpose of regularly resynching various groups so that ingrained factions are less likely to emerge. A less recognized but equally important advantage of fluid governance decisions is the ability for continuous and ongoing iteration in the operation of the chain to optimize various parameters over time as a modus operandi permitting experimentation that can rapidly be reversed or adjusted if it proves detrimental, or expanded incrementally when changes prove beneficial.

Telos Governance Overview

Telos governance is comprised of several key pieces: validating node election, governance document amendment, work proposal funds allocation, and dispute resolution.

Validating node election

Voters elect the validating nodes (called block producers) that operate the Telos blockchain via a Delegated Proof of Stake (DPoS) consensus mechanism which is similar across most third-generation blockchains. Like other EOSIO-based blockchains, Telos has 21 block producers elected by the votes of token holders based on their staked token balance. This election process is constantly updated based on these votes with a resolution of about two minutes. Block producers execute updates to the blockchain by multi-signature transactions which must be signed by at least 15 of the 21 block producers in the current producer schedule in order to be executed. These changes typically involve the updating of configuration parameters or adoption of new software versions. In this way, Telos is essentially identical to EOS in the election of its validating nodes.

Telos diverges from other EOSIO chains in that it also has up to thirty standby block producers, also elected by users (the runners-up in the same block producer voting process) and one of these is constantly rotated into the producer schedule in lieu of one of the top 21 elected block producers to verify their ability to perform block producer functions when needed and to provide top block producers regular infrastructure maintenance intervals. Typically, standby block producers rotate in twice each month for 12 hours and while performing as block producers, they have all the privileges and responsibilities of any other block producer including signing multi-signature transactions. In this way there are generally 51 or more independent validating node operators validating blocks on Telos in any given 30-day period which provides a high level of decentralization. Telos block producers must meet minimum standards and must agree to a block producer agreement governance document proscribing certain actions and defining the penalties and enforcement mechanism for infractions. Non-compliant block producer candidates are temporarily removed by votes of the current block producers. Telos block producers have established a precedent of judicious enforcement.

Voting for Telos block producer validating nodes via telos.bloks.io.

Governance document amendment

Telos has a unique process for amending its governance called Telos Amend, which aims to make this process accessible to general users who may not have a strong technical knowledge of computer code but still wish to be involved in the blockchain’s governance.

Telos governance is described in the Telos governance documents, which all users agree to abide by when first creating or using a Telos account. The primary governance document is the Telos Blockchain Network Operating Agreement or TBNOA. Each of these documents is stored on the Telos IPFS system (soon to be updated to the dStor decentralized data storage system) as a series of independent clauses. Each document exists as a table of links to these clauses on the Telos IPFS system. Any Telos user may submit a proposal to amend any of these governance documents using the Telos Amend process.

Telos governance documents are stored and amended on chain. A live viewer is available at tbnoa.org.

When a Telos Amend proposal is submitted for a document, any clauses proposed to be added or modified are uploaded to the Telos IPFS system as markdown-format text files with a unique SHA256 filehash as its resource locator. Proposals are voted over a 29-day (5 million block) period and pass if they receive a quorum of at least 15% of Telos voteable tokens and a supermajority of 60% yes votes over no votes. (A voteable Telos token is a TLOS token contained in the balance of an account that has called the Telos Decide voting registration action.) Upon passage of a Telos Amend proposal, links to these new clauses replace the former links in the table of that document’s clauses (or they are added if new). In this way, Telos governance documents may be dynamically amended by the votes of the users in a process that is entirely controlled by on-chain smart contracts.

When a governance document has been amended, developers, such as the Telos Core Developers (TCD) group must then modify and test the appropriate Telos source code to reflect this change and the Telos block producers must further test and then implement this code. (Telos maintains both an ongoing testnet and ad hoc staging networks for core source code testing purposes.) This is analogous to the process that almost any traditional democracy uses where a legislative body votes on a new law and an executive administration then enacts it. For example, if a national speed limit is changed, it generally does not become effective until there is a chance for the speed limit signs to be replaced. The Telos block producers and core developers serve at the pleasure of the voters who may vote them out if they do not fulfill their mandates in a timely manner. Unlike most blockchain projects, there is no official, entrenched core developer group, instead the Telos core developers are, by definition, those developers whose source code contributions are paid via user votes and implemented by the Telos block producers.

Telos Amend voting via Chainspector.io

Work proposal funds allocation

Telos has a work proposal system (WPS) called Telos Works for allocating funds for core development, marketing, dapp and tool development and onboarding, and any other project selected by the Telos voters. Telos Works is also entirely controlled by on-chain smart contracts and may be voted by anyone currently staking the Telos system token, TLOS, with their voting weight directly proportional to their staked TLOS tokens. As the Telos project was entirely bootstrapped by its community without any ICO or other form of fundraising, Telos Works provides the primary funding mechanism for all promotion and development.

Telos Works has been extremely successful by any measure. There have been over 110 proposals to date and several groups receive consistent, ongoing funding from the 29-day voting cycles. In addition to Telos core development and marketing, a number of new dapps and tools have been solely or initially funded through Telos Works. WordProof, a WordPress plug-in for providing proof of publication on Telos and other blockchains is an example of an important tool that was first created via Telos Works funding and went on to become a successful business. As the only user-voted WPS on any EOSIO blockchain, Telos Works is also the sole consistent source of funding for several projects that provide key infrastructure for the entire EOSIO ecosystem such as Scatter wallet or Chronicle history tool development.

Telos Works voting via Telos mobile wallet

Dispute resolution

Telos governance provides for a dispute resolution process and service called Telos Resolve which seeks to create a path to dispute resolution for entirely on-chain conflicts using user-elected arbitrators and a smart contract-based arbitration management process. Users may file dispute cases against another account and provide evidence to assigned elected arbitrators off-chain with key events in the dispute resolution process recorded on-chain via smart contract in order to avoid immutably writing personally identifying or private evidence to the blockchain. The process is governed by the Telos Blockchain Network Arbitration Rules and Procedures (TBNARP) governance document and Telos Resolve case decisions are referred to the block producers for execution. This seeks to be an avenue for resolving disputes due to smart contract errors or lost or disputed account keys, for example. Strong evidence is required for any decision with cryptographic proof being the general standard. While the Telos Resolve smart contracts have been instituted for some time, the system is still in its early stages of use as arbitrators receive training and discuss standards and practices. As yet, there has been little call for dispute resolution. This is expected to change as Telos continues to grow and attract more dapps and users.

Telos Decide

While the governance of Telos is quite advanced in many areas, a distinguishing feature is its ability to offer these many governance features to any dapp or group deployed on the blockchain. This suite of tools is known as Telos Decide. As important as blockchain governance is to the base blockchains themselves, it offers even greater advantages when it can be similarly deployed by any dapp without duplication of effort. The Telos core developers spent over a year advancing these features into the most extensive and nuanced in the world and by giving these same abilities to other dapps will vastly simplify development tasks for tens of thousands of dapps to follow.

Telos Decide allows any dapp or group to create smart contract-controlled governance rules and processes that incorporate a variety of forms of voting and token management that are fully configurable to its needs. Voting is centered around a dapp’s or group’s unique token, which can be configured as transferrable or non-transferrable, divisible or indivisible, governance use only or governance and economic use. Various forms of voting can be implemented for different use cases, for example, one vote per account, one vote per token, or one vote per token with quadratic scaling to reduce the voting power of the largest stakeholders while still respecting varying levels of stake. With these tools, one project may have a single indivisible, non-transferrable, governance-only token for each user account giving every participant a single vote while another may offer transferrable, divisible, governance and economic tokens that confer stake-weighted voting rights. Ballot initiatives can be similarly configured in terms of the type of voting, required quorums in terms of number of voters, number of tokens voted, or both, and the size of the majority required to pass a ballot.

Telos Decide also enables elections of boards or committees either in standard elections, where multiple candidates run for each individual seat or leaderboard elections, where multiple candidates run for multiple seats and the top vote earners are elected from a single candidate pool. Any election or ballot can trigger a predetermined transaction upon successful completion. (Telos transactions can be comprised of multiple distinct actions.) These can include any valid transaction but are typically the transfer of funds or assignment of account signing permissions to the control of the winning candidate’s account. Board seats can therefore be transferred to election winners for a configurable term. These board accounts, themselves, may possess non-transferrable governance function tokens that allow voting on board or committee ballots, based rules that each dapp or group may configure to its own specification. Such board actions can, in turn, trigger additional transactions such as spending money or the further election of executive positions with control over specific permissioned accounts.

Telos Decide leverages the powerful system of Telos account privileges, which allows an account to assign different signing abilities and requirements for different accounts and functions within an account. For example, an account may allow a seat winner to transfer tokens controlled by the account, but not to change permissions. Permissions can be controlled from other accounts and permissions may have variable weights as part of multi-signature transactions.

The TCD is in the process of further modularizing both the Telos Decide smart contracts and user interfaces so that developers can use either a common set of voting and governance tools or create their own white label implementations of web and mobile applications. Telos Decide is the only governance toolset that is implemented at the core blockchain level and maintained by the project’s core developers directly. This offers enormous advantages in consistency, bug detection and elimination, and common voting tools. Users have no need to learn a new interface for each individual dapp and developers can focus on their own dapps’ features rather than building and testing core governance functions. This common approach also portends more rapid development and testing of new features than would be possible with varied, application-level implementations. Combined with funding of ongoing development via Telos Works, Telos Decide aims to outpace any competitors.

Interacting with customized Telos Decide voting groups via app.telos.net.

The Telos Foundation

The Telos Foundation should be mentioned because it is often mistakenly seen as having a governance role. In fact, the Telos Foundation is strictly a promotional body meant to provide an entity that can interact with more traditional businesses. Fully decentralized blockchains like Telos are challenged in conducting business with traditional entities for purposes such as advertising or conference participation or sponsorship because there is no entity that can sign agreements. The Telos Foundation fills this role for Telos. Its board is elected using committee election and management tools that were a precursor to Telos Decide. This mechanism is expected to be updated in the near future to incorporate the revised system and expand its voter base.

Telos Decide-type voting for the Telos Foundation board via Sqrl wallet.

Comparison to Other Leading Blockchain Projects

Blockchain governance is a rapidly developing field. Several blockchain projects include impressive governance features and Telos has benefited greatly from their example. The Telos Works WPS, for example, was largely modeled on the success and evolution of the Dash WPS. The most significant differences being that Telos Works is entirely controlled by smart contracts and voteable by any token holder.

Tezos has been considered by many to be the current leader in blockchain governance due to its ability to vote on core protocol changes. Tezos and Telos bare similarities beyond their names. The Tezos mainnet launched just months before the Telos mainnet in 2018. Tezos also allows the updating of its core code via highly participatory votes by its token holders, like Telos Amend. The difference between these two processes is mostly in approach. Proposed amendments on Tezos are in the form of executable core code, which users vote on the implementation of, with successful ballots being enacted directly into the core protocol code immediately. Telos Amend, on the other hand, allows users to vote on adopting human language governance clauses which must then be implemented and executed in code by developers and block producers. Both of these approaches are entirely valid with their own advantages and drawbacks. The Telos Amend process could be seen as more inclusive to non-programmer voters but slower to implement, whereas the Tezos amendment process is implemented immediately upon successful voting, but requires general users to rely on the interpretation of Tezos programming experts. Both processes have significant merit.

Aside from these amendment processes, however, Telos stands out from Tezos significantly due to its additional governance structures such as Telos Works WPS, Telos Resolve dispute resolution, the election of validating nodes, and most significantly, the ability to extend all of these governance functions to any dapp or group on the blockchain through Telos Decide. No other blockchain project offers similar core-level governance features to Telos Decide. The Ethereum project Aragon also offers useful DAC and DAO creation and management features. However, it does not operate at the chain protocol level, and is subject to the scaling issues and per-transaction fees of Ethereum.

A Telos Works funding proposal for the Telos core developers via Chainspector.io.

Telos Governance in Action

It is not surprising that Telos Works has been one of the most popular and successful components of Telos governance. The world of open source software and blockchain have more fans than funding opportunities, so a program that offers people a way to earn money or secure funding for new projects is bound to draw attention. What may not be obvious, though, is what an effective attractant and onboarding tool Telos Works has become. The ability to fund projects has supported and grown the ranks of Telos core developers and attracted new dapps and tools to Telos. Obtaining seed funding is challenging for most projects, particularly in the blockchain space and more so at the end of a long bear market. Telos Works enjoys a wide variety of project proposals. A number of applicants are receiving regular, ongoing funding which allow key initiatives to build momentum.

The Telos voters participate in extensive discourse about the relative merits of funding proposals and there is an expectation of regular reports and visible results from those projects receiving funds. This is representative of the governance culture emerging within the community. Telos voters are also proving vocal about expecting enforcement of rules and debating the current configurations of voting parameters required for passage, among other topics.

Telos Amend is less often used but inspires strong reactions within the community. The first Telos Amend proposal to pass was the Telos Economic Development Plan, (TEDP) which addressed a number of issues with Telos economics such as block producer pay and funding for Telos Works and the Telos Foundation. The TEDP passed with overwhelming acceptance and was quickly implemented, coinciding with an increase in the Telos token price and adoption of more dapps and users. A current Telos Amend set of proposals gives the Telos voters options for modifying the passage requirements of Telos Works proposals, due to concerns that the current configuration may be allowing more proposals to pass than is optimal for long term sustainability. Three increasingly stringent proposals are being voted simultaneously, with a fourth possibility of no change in the parameters if none of the measures pass.

Culture is often the forgotten pillar of governance; without a culture that shares a common belief in the value and efficacy of voting, no democracy or quasi-democracy can function. Telos voters are regularly seeing their votes being counted and directly influencing the outcome of various initiatives, which provides a positive feedback loop towards participation and personal investment in ballot measures and outcomes. By making voting transparent and convenient, Telos is largely avoiding voter apathy that can plague many democratic systems.

Dapps have begun implementing governance features through Telos Decide. A good example of this is the SEEDS regenerative economy dapp that makes use of these features in administering its governance, selecting projects to fund, and determining when milestones have been reached. SEEDS is aligned with a decentralized organization called Hypha. These organizations can use human-determined voting to redefine decentralized organizations from a Decentralized Autonomous Organization (DAO) model where decisions are arrived at through automated, deterministic business logic rules contained in smart contracts to a Decentralized Human Organization (DHO) model where the smart contracts still impart autonomy and determinism, but do so by providing structures for human voting that determines outcomes. Hypha in particular, supports holocratic governance so the DHO in its case could also stand for Decentralized Holocratic Organization. Holocracy is a form of decentralized governance where decision-making is distributed throughout self-organizing teams empowered with decision-making abilities as opposed to a traditional top-down structure. Telos Decide provides tools for holocracies that Hypha is further developing and extending into a robust holocracy toolset.

The word telos means the purpose of something and Telos is designed to empower people to organize around common purpose, using blockchain-based governance tools. In addition to the holocracy tools Hypha is building, Telos Decide is providing an interface to quickly organize groups organized to specific purposes and provide tools to make decisions, elect custodians, and allocate funding. The early versions of this interface can be seen at app.telos.net. As these tools evolve and gain acceptance, it’s quite possible that a concept of telocracy, or governance by or for purpose, may emerge where groups coalesce around accomplishing a shared purpose and organize and manage themselves using blockchain governance tools such as Telos Decide.

The SEEDS Passport app employs Telos Decide features to manage its governance.

Telos as a Smart Contract Platform

The strong governance features of Telos are enhanced by the technical traits of the network. Telos operates at the block time of one half second per block providing high resolution data recording and low latency that users expect from mobile and web apps. Telos also has enormous capacity, boasting the second-highest record for the amount of transactions performed per 24 hours (32,217,207 tx) among all blockchains tracked by Blocktivity.info. The Telos resource staking model means that individual transactions on the Telos blockchain do not incur transaction fees. Instead users stake TLOS tokens, which are not consumed, in order to reserve network resources. Telos is further simplifying this resource management by allowing dapps to stake resources for their users and by implementing a limited number of “universal basic transactions” (UBTX) each day for low-resource accounts — which is in line with the free account creation Telos has offered since launch as a way to reduce onboarding friction for users.

Telos is a powerful platform for deploying smart contracts due to the growing EOSIO developer ecosystem with many services and tools available. Telos smart contracts are written in C++, which is a familiar programming language with a large base of developers. These contracts are compiled to run on Web Assembly (WASM) to ensure fast execution. Telos is able to run any smart contracts developed for other EOSIO blockchains and provides a number of unique developer tools for added benefits. Telos Decide is an example of one of these toolsets. Another example is the dStor decentralized data storage system which is currently entering beta release. Taken together, these governance tools and strong technical aspects make Telos a leader for smart contract deployment, particularly for any dapps planning to incorporate governance features.

The Future of Decentralized Governance

The emergence of cryptocurrencies and blockchains is, in many ways, a result of dissatisfaction with the world’s existing financial and monetary systems. Decentralized governance will be a likely result of growing dissatisfaction with the world’s existing governance systems. The world is currently witnessing even mature democracies challenged by populism, nationalism, authoritarianism and other internal and external forces — and these are often the more stable and established governments. Less developed nations face even steeper challenges. Just as Bitcoin created a global peer-to-peer monetary system that transcended national boundaries, emerging decentralized governance platforms like Telos will allow people to organize, manage and govern self-sovereign groups in a peer-to-peer manner that need not be bound by existing borders. For some participants, this will present new forms of participatory self-governance. For others, currently living in areas without representational governments, Telos may provide the first opportunities to participate in any form of transparent governance. It’s likely that millions of people may one day cast the first consequential votes of their lives on such a decentralized governance platform. Telos is building these tools today to empower all people to live with more freedom, self-determination, and purpose.

###

About the author: Douglas Horn is the Telos architect and whitepaper author and a Telos core developer. He is the founder of GoodBlock, a Telos block producer and blockchain development company currently releasing the dStor decentralized data storage system.

RFC: Amending Telos Works Voting Thresholds

RFC: Amending Telos Works Voting Thresholds

Proposals to Update Telos Works

The Telos Works work proposal system has been a clear success for Telos, allowing the Telos token holders to vote on funding all manner of development, marketing, and user acquisition proposals. However, there has been discussion in the Telos community about increasing the standard for passage from the initial figures of 5% voter participation and 50% majority to something more stringent. These values were created before the system was live as a best guess of what might be appropriate with the understanding that the Telos voters would have opportunities to adjust this through the Telos amendment process. With the Telos Works system passing 100 proposals, this seems like an excellent time for Telos users to consider what we’ve learned about Telos Works voting and consider making some adjustments.

For the past two weeks, we have discussed this topic in various Telos discussion groups to gauge the community feeling on the matter. It comes as no surprise that the thoughts are quite varied, from no changes needed to very stringent passage requirements and many shades between. For this reason, I propose multiple competing proposals at various degrees of change occurring simultaneously.

I propose submitting three proposals of increasing stringency (the fourth option, to leave the system as is, will be the result if none of these proposals reach the required passage threshold for a Telos Amend™.) Each of these proposes to alter the language of clauses 27 and 28 of the Telos Blockchain Network Operating Agreement (TBNOA) as follows:

Proposal A:

Increase the voter participation from 5% to 20% of voteable tokens.

Proposal B:

Increase the voter participation from 5% to 20% of voteable tokens and increase the passage requirement from >50% Yes vs No votes (excluding Abstain votes) to >55%.

Proposal C:

Increase the voter participation from 5% to 20% of voteable tokens and increase the passage requirement from >50% Yes vs No votes (excluding Abstain votes) to >65%.

Each of these proposals will also increase the threshold of votes required to receive the submission deposit from 0.1% of voteable tokens to 5%.

Because the proposals are additive in their increased difficulty of passage, if more than one Telos Amend proposals is approved, then the most stringent of the approved proposals will be enacted, not the one that receives the greatest amount of votes. For example, if both Proposal A and Proposal B pass the Telos Amend voting requirements, Proposal B would be enacted even if Proposal A receives more votes overall.

Voters should be aware that they can (and should) vote Yes, No, or Abstain on all three proposals.

Starting the Vote

The Telos Amend system is about to receive a long-awaited update that will allow users to vote with the weight of their TLOS staked to REX as they can when voting for BPs. This is expected to greatly increase voter participation. Therefore, these proposals will not be submitted until the new voting system is implemented — most likely less than a week from now.

Comments are requested for this proposal via the main Telos Telegram group @HelloTelos – https://t.me/HelloTelos. The proposed text of each proposal is listed below.

Current Text from the TBNOA

## 27. Worker Proposal Submission Fee
A submission fee of 3% of the requested amount with a minimum of 50 TLOS will be required as part of the submission. The fee shall be refunded to the Proposer if the worker proposal reaches a minimum threshold of 20% YES vote amongst all votes and a minimum voting total (YES or NO) of at least 0.1% of all TLOS tokens at the end of the Voting Period.

## 28. Passage of a Worker Proposal
Any Worker Proposal that receives a simple majority of YES votes and a minimum threshold of 5.0% of votes from all voteable TLOS tokens at the conclusion of the Voting Period shall be an “Accepted Proposal.”

Proposal A

## 27. Worker Proposal Submission Fee
A submission fee of 3% of the requested amount with a minimum of 50 TLOS will be required as part of the submission. The fee shall be refunded to the Proposer if the worker proposal reaches a minimum threshold of 20% YES vote amongst all votes and a minimum voting total (YES or NO) of at least 5% of all TLOS tokens at the end of the Voting Period.

## 28. Passage of a Worker Proposal
Any Worker Proposal that receives a 50% or greater majority of YES votes over NO votes, excluding ABSTAIN votes, and a minimum threshold of 20.0% of votes (YES, NO, or ABSTAIN) from all voteable TLOS tokens at the conclusion of the Voting Period shall be an “Accepted Proposal.”

Proposal B

## 27. Worker Proposal Submission Fee
A submission fee of 3% of the requested amount with a minimum of 50 TLOS will be required as part of the submission. The fee shall be refunded to the Proposer if the worker proposal reaches a minimum threshold of 20% YES vote amongst all votes and a minimum voting total (YES or NO) of at least 5% of all TLOS tokens at the end of the Voting Period.

## 28. Passage of a Worker Proposal
Any Worker Proposal that receives a 55% or greater majority of YES votes over NO votes, excluding ABSTAIN votes, and a minimum threshold of 20.0% of votes (YES, NO, or ABSTAIN) from all voteable TLOS tokens at the conclusion of the Voting Period shall be an “Accepted Proposal.”

Proposal C

## 27. Worker Proposal Submission Fee
A submission fee of 3% of the requested amount with a minimum of 50 TLOS will be required as part of the submission. The fee shall be refunded to the Proposer if the worker proposal reaches a minimum threshold of 20% YES vote amongst all votes and a minimum voting total (YES or NO) of at least 5% of all TLOS tokens at the end of the Voting Period.
## 28. Passage of a Worker Proposal
Any Worker Proposal that receives a 65% or greater majority of YES votes over NO votes, excluding ABSTAIN votes, and a minimum threshold of 20.0% of votes (YES, NO, or ABSTAIN) from all voteable TLOS tokens at the conclusion of the Voting Period shall be an “Accepted Proposal.”

###

About the author: Douglas Horn is the Telos architect and whitepaper author, and the founder of GoodBlock, a block producer and app developer for the Telos Blockchain Network.

More about GoodBlock can be found at: www.goodblock.io

Join us on Twitter @GoodBlockio

Vote for GoodBlock on the Telos Blockchain Network @goodblocktls

RFWP: Telos Arbitration Ombudsman

RFWP: Telos Arbitration Ombudsman

Need:

Telos is leading the blockchain world in offering dispute resolution through smart contract-controlled arbitration performed by community-elected arbitrators. The Telos Arbitration Portal has been live for several months, arbitrators have been elected, and some cases have been filed. However, the actual execution of any arbitration has been stymied by lack of general understanding and education by users and arbitrators about the process and by minor technical issues. These sticking points should be fairly easily resolved once someone takes ownership of this process. However, until someone takes some ownership over this process, no progress is occurring.

Requirements:

We seek a proposal for a person or team of people paid by the Telos blockchain through WPS to become subject matter experts on Telos arbitration, its processes, rules, and tools. The Telos Arbitration Ombudsman would have no authority within the system (and should probably not be arbitrators, themselves, though it’s not strictly forbidden), nor would they receive any specific evidence regarding specific cases, but would be paid to perform duties around information, education, and interacting between various stakeholders.

A Telos Arbitration Ombudsmen would:

· Interface with the community regarding Telos arbitration

· Create and/or refine documentation

· Assemble documentation, articles, and refer users to relevant information

· Work with Telos Core Developers to report and resolve technical problems with the arbitration portal or contracts

· Offer “customer service” to users experiencing problems with the arbitration process, outside actual arbitration duties.

· Maintain publicly available lists of needed service providers (translators, expert witnesses, attorneys) who work with Telos arbitration as they emerge.

· Improve general educational information, news items, etc for elected arbitrators and candidates.

About the author: Douglas Horn is the Telos architect and whitepaper author, and the founder of GoodBlock, a block producer and app developer for the Telos Blockchain Network.

More about GoodBlock can be found at: www.goodblock.io

Join us on Twitter @GoodBlockio

Vote for GoodBlock on the Telos Blockchain Network @goodblocktls