Diverse governance: Who has the final say in decentralized communities?

By: Tobin South, Leon Erichsen, Shrey Jain, Petar Maymounkov, Scott Moore, E. Glen Weyl

Compiled by: Tiao

Translator’s Preface:This paper was published earlier this year and is about the design of protocols for collaboration and self-governance within organizations, using a highly formal language (mathematics). One of the interesting things to me is that the governance in this protocol isToken(Token)" has no exchange value outside the protocol, but for the organization itself, it is the only "Token". This will make people want to compare many governance tokens and further think about LXDAO The protocol design.

This article contains the first two sections of the article Plural Management. The last three sections will be published in the next issue.

1. Abstract

We introducedDiversity ManagementPlural Management is a model that partially replaces hierarchical organizational authority with plural mechanisms to allow networked authority to emerge. Participants gain influence by anticipating and fulfilling organizational priorities, and use this influence to set priorities and validate contributions, thereby facilitating a dynamic, merit-based power structure. We use open source software development as an example to illustrate this approach - it emphasizes valuable contributions and diligence without relying on hierarchical choke points; therefore, it enhances participation and helps achieve adaptive collective intelligence.

Multivariate Management Protocol Overview:

Organization members can dynamically earn management points by doing work. Through the issue board, members can use points to make quadratic contributions to determine the priority of issues. These points will be paid to members who resolve the corresponding issues through their contributions. Payment will only occur after other members use their management points to exercise their authority through quadratic voting.Xiaobai NavigationOrganization administrators can choose to allow members to earn governance points by correctly predicting voting outcomes, thereby rewarding those who perform due diligence on contributions and can foresee the preferences of on-duty managers. By scaling from small collectives to large organizations, this protocol enables dynamic governance control without the need for a simple hierarchical structure.

2. Introduction

The classic dichotomy between the rigidity of hierarchical organizations and the flexibility of flat organizations is a fundamental challenge facing organizational design. Traditional hierarchies with clear command structures remain the orthodoxy, but are generally seen as inhibiting the dynamic capabilities that organizations need to thrive in today's complex environments. In contrast, flat structures, while inclusive and dynamic, often struggle to maintain coherent direction, momentum, and accountability, often falling into the "tyranny of structurelessness" (Ostrom and Hess, 2011). The classic alternative to this dichotomy is to use market mechanisms (Hamel and Zanini, 2020; Coase, 1995). However, an important role of the enterprise is to create internal partial public goods and take advantage of increasing returns, which the market is generally unable to provide effectively (Samuelson, 1995). Therefore, Groves (1973) and Groves and Loeb (1979) advocated the use of public goods mechanisms to organize production within the enterprise as an alternative to hierarchy and market. However, these mechanisms are often considered cumbersome and impractical.

Recently, however, variations of public goods mechanisms such as quadratic voting (Lalley et al., 2016) and quadratic grants (Buterin et al., 2019) have become increasingly widespread and successful [1]. This paper aims to build on these advances, return to Groves’ agenda, and outline a framework we call “pluralistic governance” to combine these mechanisms with other successful mechanisms to emulate many of the characteristics of organizational authority and collaboration without resorting to the simplistic hierarchical approach.

The traditional hierarchical management system is the backbone of modern corporate and organizational structures, with power dynamics following a top-down approach (Drucker, 1974). In such a system, employees tend to get promoted by working hard and aligning their actions with the culture articulated by those in authority, a practice sometimes derogatorily referred to as "cocking the shove." Critics point out that this practice can stifle creativity, reduce employee engagement, create decision-making bottlenecks, and often results in talent at lower levels in the organization being left with nowhere to realize their ambitions.

At the other end of the spectrum, the lack of structured management has its drawbacks, such as the “tyranny of structurelessness,” in which a lack of clear roles and responsibilities can lead to chaotic, inefficient, informal, and often unaccountable power structures (Friedman, 2007). Striking a balance between overly rigid hierarchies and a complete lack of structure has always been a complex task. Innovative management approaches have been proposed and widely implemented, such as flat organizations that minimize layers (Laloux, 2014), Holacracy, which distributes decisions across overlapping teams (Robertson, 2015), and Sociocracy, which emphasizes consensus governance (Buck and Endenburg, 2012). These models all attempt to address the limitations of traditional hierarchies by being more egalitarian and adaptive (Rothschild and Whitt, 1986). However, none of them have the mechanistic clarity of markets or hierarchies, which undermines their ability to avoid the challenges highlighted by Friedman. We aim to fill this gap by leveraging advances in multivariate mechanism design.

In our proposed model, governance points are a dynamic ledger of contributions and influence. Internal, non-financial points are initially allocated based on role or past contributions, and are subsequently earned through direct contributions and triage of situations. The expenditure of these points is constrained by a quadratic cost function when prioritizing and approving contributions to avoid over-dominance by those with greater authority and to achieve optimal public goods outcomes. Prediction markets are used to encourage those with limited authority to act as “analysts”, helping those with authority to triage and triage contributions, while the dynamic evolution of the priority of unresolved tasks acts as a dynamic auction-style bounty system, ensuring that tasks are resolved in a timely and prioritized manner. Therefore, in addition to presenting the specific design we use to illustrate this structure, we also aim to propose a general structure for implementing such a composite by combining different mechanisms.

The rest of this article is organized as follows:

Section 2 introduces the multi-governance protocol, describing in detail the high-level aspects of the system, the roles in the ecosystem, and the process of earning and spending governance points. It then discusses the practical application of multi-governance systems in open source software development, showing how they can help solve the long-standing governance problems of open source projects as they scale. Section 3 elaborates on this, describing a more detailed and easy-to-implement technical version of the protocol. Section 4 provides a detailed analysis of the protocol's features, studying voting, predictive behavior, and the optimal choice of parameters in the system. Finally, Section 5 explores some of the implications of the protocol and highlights the open problems and future work it raises.

3. Multiple management protocols

There are three roles in this ecosystem:Workers, they make direct contributions to the organization;Managers, they determine what work is important and whether a work is of acceptable quality;Administrators, they can determine system properties to influence behavior. Importantly, a person can play multiple roles at any time and establish relationships with multiple people according to these roles; there are no fixed roles, and organizational members are encouraged to play different roles when facing different individuals.

Rather than assigning everyone a set of hierarchical roles, everyone in this organization has a set ofManagement creditsThese points allow individuals to exercise authority in decision making and be recognized for their contributions. We will walk through the steps to earn and use points. These points are only valid for a specific organization, project, orCommunity, have no value outside of them; in this sense, they are similar to "Community” or “artificial” currency (Blanc, 2018). As we will discuss later, these points cannot be traded externally, they are only used to control the flow of dynamic management potential.

Imagine an organization that has aIssue board, which lists all the major tasks or initiatives that need to be completed (similar to the open source issue tracker in Section 2.1). Individuals with admin points can set priorities for the organization by assigning a priority to an issue using their points. The priority of an issue is not simply the sum of the points assigned to it, but may also be matched through a matching pool (provided by individuals in the admin role), which is consistent with the actual application of quadratic funding, which we will discuss further below.

Individuals can act as workers,ContributionA worker contributes a solution to an issue in the form of a proposal. If the contribution is accepted, the worker receives points proportional to the total points assigned in the priority setting. Essentially, from the worker's perspective, the "bounty" attached to an issue may increase over time until enough reward is provided to compensate the worker for the cost of solving the issue. This is like a reverse Dutch auction, although there is no guarantee that the reward will increase over time.

Once a contribution is made, it will enterContribution voteIndividuals can spend management points to vote on whether the contribution should be approved. If the vote passes, the worker receives a reward; if not, the issue goes back to the board (where the manager can increase the priority to offer a higher bounty). This voting is quadratic, ensuring balanced influence between individuals with different amounts of points.

In addition to voting, each person can choose to "bet" the number of points they use to vote, predicting whether the contribution will be accepted or rejected. If the prediction is correct, this bet will receive double the voting points.Vote prediction，个人可以因正确预测整个Community的愿望而获得奖励。我们引入了一个Prediction subsidyParameters that administrators can set for each contribution vote to reduce voting costs and increase staking rewards. By default, it is completely unprofitable to vote and then stake on a vote. However, in many cases, administrators may want to increase subsidies to give individuals who can anticipate the needs of the community a chance to gain authority. For example, providing subsidies can incentivize individuals with fewer management points to participate in votes that would otherwise be too costly for them. This means more people are doing due diligence on contributions. If there are many contributions in a large organization, staking on votes is akin to rewarding individuals for administrative review to "triage" contributions, giving important divisive votes to managers with more authority.

Combining these two systems of quadratic agenda setting and hybrid voting-prediction, we are able to create a dynamic governance system where contributions are rewarded based on their public good demand when the broader organization collectively approves them, and individuals who have a deep understanding of or model of community preferences are rewarded and empowered for supporting the governance process.

Figure 1: Key components of the multi-party governance workflow. Any member can be a contributor or manager, exercising authority by spending points, which are earned through contributions and correct voting predictions.

3.1 Open Source Applications

While polyglot governance protocols can be applied to a wide range of organizations and communities, they are particularly relevant to the world of open source software and other areas where peer production is prevalent (Benkler, 2017). Far from being a niche industry, Git-based open source software powers over 93% of modern software applications (Daigle, 2023) and has been operated through a community governance model in which contributions in the form of code are evaluated for their quality and relevance before being merged into existing work. Despite these important contributions, the governance and management challenges facing open source communities are well known, most notably described by Eghbal (2020), including the following:

Although open source contributors’ contributions are recorded, it is difficult to track and trace recognition of contributions because their relationship to higher-level goals is unclear and their value is unclear. This reduces motivation and sustainability.

While contributions to open source projects are often open and participatory, their management (often referred to as "maintenance") is often in the hands of a "benevolent dictator for life", which contradicts its underlying democratic values and leads to people with different opinions "forking" the project, fragmenting efforts.

Worse, the inability to leverage distributed participation to assist in governance places a heavy burden on project maintainers, who start projects highly motivated but have to maintain quality over the years, forcing them to identify and triage an increasing number of contributions of questionable quality with little community support.

Especially as a project grows and becomes more widely used, its potential directions for improvement grow exponentially, and the improvements most needed by users often lack clarity, resulting in projects with too many features but not enough usability.

By providing clearer direction and greater empowerment for contributors, multi-management can help founders gradually transfer management authority to those who have proven their value in the community through code contributions, diligence, or support. Because this model is lightweight, iterative, and autonomous, it is well suited to the agile environment and tools commonly used in open source communities.

Take GitHub, the most popular open source hosting platform, for example. For any project, there is a code repository set up by an administrator or maintainer, and any contributor can be listed as a member. This repository comes with an "Issues" board (this is very similar to the issue board we described, but without the clear numerical priority). Anyone on GitHub can create contributions on this board in the form of a "pull request" (PR) to deal with one or more open issues. After discussing the pull request in the comments, the community can decide to accept or reject it, and then the maintainer can add or "merge" the contribution to the code repository. With minimal changes to the workflow to use multi-management, any maintainer or administrator can set a priority label on GitHub and associate it with a price expressed in points, thereby driving more contributions into their code repository as a first step to eventually improve their low average bus factor (i.e. the number of key people in the project) (Metabase, 2022).

It's worth noting that in general, while contributions are usually code, anything can become a PR. For example, if someone is going to be appointed as a social media manager for a project, an issue will be raised stating the need for a social media manager. Once someone is appointed, the new social media manager can then raise a simple PR to add their name to the community record. If the community votes to approve the new role, the social media manager will receive additional management points reflecting their new role.

3.2 A Simple Use Case

One specific application of polyglot governance outside of the usual open source context is the book Plurality, a Git-based experiment in collective authorship. Initiated by E. Glen Weyl and Audrey Tang, 50 members from around the world contributed to the book Plurality: The Future of Collaborative Technology and Democracy without any expected rewards. The project uses a polyglot governance agreement to gradually transfer ownership of future improvements to the book, including content updates, translations, and further links to related materials. Over time, the most meaningful contributors will help lead not only the book, but also the field of study itself.

Imagine a political economy undergraduate from a little-known university. She sees a typo, opens an issue and submits a pull request. This action doesn't earn many points during voting, but the small amount of points allows her to participate in priority setting. Inspired, she continues to look for opportunities to contribute, and finds an open issue around a chapter that her paper work could help with. She submits a pull request on the issue board, adds some key references from the book, and is rewarded with a large number of points.

Given the challenges of inclusion in today’s higher education environment, such students may never have the opportunity to engage in such work without the permissionless and community-judged structure that diversity governance provides (Gvozdanovi and Maes, 2018).

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