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.
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.
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.
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 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.
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.
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.
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.
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.
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.