Token Weight for Token-Based Governance Voting

Not all opinions on a given topic are equal. When it comes to a decision about your heart health, would you prefer input from a well-respected expert you trust within the profession of maximizing human health related to all things connected to the heart or a gardener? Expertise, experience, relational trust, and more all go into how we create social proof which influences our decision processes in governance as to what is a “good” (increase the ability to function) or a “bad” (decrease the ability to function) decision.

All democratic voting systems come with their own challenges such as the tyranny of the majority, vote buying, Sybil attacks, uninformed voters, and apathy. Tokenized voting allows for skin in the game and prevents Sybil attacks because there's a cost to be involved. One of the problems many token-weighted voting systems have is they tend towards plutocracy. A version of the golden rule that goes, "He who has the gold makes all the rules."

Additionally there are motivational psychology concerns related to how extrinsically (as opposed to intrinsically) incentivized activity leads to less creativity. Paying someone more to repeatedly pull a level works well if you're in an industrial economy, but increasingly we are living in a service-based economy which thrives under new, creative approaches to adding value. Building communities around tokenization required for governance can create a motivational systems which are not creative and don't easily evolve (assuming the tokens are transferrable and a market develops to trade them as financial value).

Human motivation aside (for now), what can we do about the person with all of the tokens having too much of say in how things go? If you're not familiar with skin the game, please do understand that concept before proceeding. Those who advocate for "just make it one person, one vote" often miss something important about how value within a community is protected and how some have far more commitment to the wellbeing of the group than others (which they ideally align with their own well being through skin in the game).

The easiest and most common solution looks something like this:

This is simple token-weighted voting. There are a number of interesting things you can add to it like ranked choice voting, one token / one vote, approval voting (currently used by EOS and Hive where you can vote for more than the number of positions being filled), quadratic voting, and more. In this post I want to explore something else which may have a name, but if it does, I'm not familiar with it. I want to think about how the voting influence is effected by not just the number of tokens (skin in the game) but also by how big the game is and your ranking within that game compared to everyone else playing.

In this simple example, if Alice and Bob don't give Joe and Max enough influence to want to participate in the game, guess what happens to the value of Alice and Joe's tokens? As I've said many times before, financial value is shared story telling and the size of the community that voluntarily reaches consensus about that value has a big role to play in how real and sustainable that value is. If the community isn't that big, the extra skin in the game Alice and Bob may can become less valuable as fewer people participate, potentially leading to a complete loss in value. It's an existential risk many crypto communities don't fully appreciate. If the token distribution isn't well balanced and those who get in later don't feel like they have enough say in the governance (and rewards) of the system, they may choose to go build something new instead of put their energy into something which disproportionately rewards those who may be doing less work work today but did take on significant risk early on when a successful outcome was far less certain.

What if token-based governance was not just about absolute token weight, but on the ranking of that weight to others in the community?

Example:

The additional modifiers (A, B, C, D...) could be tuned based on an algorithm related to how large the community is and how equally distributed (or not) the tokens are. The basic idea is that we want to reward those with more skin in the game to have more influence in the decision making process for the group while also recognizing the systemic risk inherent in the system where their influence far outweighs all the other participants in the community who give the system value by their very presence, consensus belief, and attentional energy.

What do you think about these ideas? I probably got the math wrong, but I more so wanted to discuss the idea of ranked token holder voting and not just straight token weight voting. Is there a name for this? Does it make sense? Let me know in the comments.

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