In Blockchain We Trust(Less): The Future of Distributed Governance

Project Information

BlockchainGov

Grant agreement ID: 865856

DOI

10.3030/865856

EC signature date 20 August 2020

Start date 1 January 2021

End date 31 December 2026

Funded under

• EXCELLENT SCIENCE - European Research Council (ERC)

Total cost

€ 1 997 000,00

EU contribution

€ 1 997 000,00

Coordinated by

CENTRE NATIONAL DE LA RECHERCHE SCIENTIFIQUE CNRS
France

Periodic Reporting for period 3 - BlockchainGov (In Blockchain We Trust(Less): The Future of Distributed Governance)

Reporting period: 2024-01-01 to 2025-06-30

Summary of the context and overall objectives of the project

The general malaise of liberal democracies—characterized by an erosion of trust in traditional institutions (e.g. states and banks) and new intermediaries (e.g. social media platforms)—has spurred the development of new blockchain-based applications that allegedly obviate the need for trust. Often described as a “trustless” technology, blockchain’s potential for disintermediation has been touted as a catalyst of innovation that could displace existing power structures.
However, blockchain technology also faces significant challenges in terms of scalability and governance. Over the years, we have witnessed a progressive concentration of power, with the establishment of large centralized operators or market players that could collectively influence the operations of these networks. Hence, is blockchain technology shifting power away from former decision-making centers only to create new ones — or can it lead to an actual new organization of power?

BlockchainGov is an interdisciplinary project that will study the impact of blockchain technology on new and existing governance structures, and its consequences for legitimacy and trust.
First, it will investigate the governance of existing blockchain systems, and analyse the power dynamics at play within these systems.
Second, it will examine the legitimacy and long-term sustainability of existing attempts at distributed governance, through the lenses of legal and political theory.
Third, it will explore the potential of blockchain technology to support new models of distributed governance providing an architecture for decentralized and participatory decision-making with attributes of transparency and accountability.
Last, it will experiment with these new models at different levels of governance, from the community level to the global governance level.
Our research informs the design and implementation of blockchain-based systems, as well as the governance of the various communities or institutions that rely on these systems. From a scientific standpoint, the project is contributing to an emerging, multidisciplinary field of scholarship on “distributed governance” that uniquely blends insights from the disciplines of legal theory, political science, and computer science. It provides key empirical and theoretical contributions to academia, with important policy implications to the broader questions of institutional and global governance.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

The research team currently comprises three Ph.D. students and two postdoctoral researchers, along with two part-time communication managers in charge of external communications and dissemination. Thus far, the research team has been mainly focused on collecting and analyzing data concerning the governance of existing blockchain communities (research pillars 1 & 2) while engaging with the pilot community through Participatory Action Research (pillar 4). The team has recently started the design and modeling work (pillar 3) in collaboration with the pilot communities to develop guidelines and best practices for distributed and participatory governance systems. The work done so far has been articulated into a series of reports and publications that synthesize the insights produced during this period.
In terms of publications, the project has already produced twenty scientific articles (twelve of which have already been published in scientific journals), ten book chapters, or short essays (four of which have already been published). The team has coordinated five special issues (three of which have already been published) and four substantial reports synthesizing the insights from the research project. In addition, the project has also secured two book contracts with MIT University Press, one of which is well underway and scheduled for publication in fall 2024.
In terms of academic activities, the project has organized five international conferences or workshops with leading institutions (Harvard/Kennedy School, EUI/Robert Schuman Center, Royal Melbourne Institute of Technology (RMIT) and Centre of Excellence for Automated Decision-Making & Society in Melbourne, CNRS/CERSA, Collège des Bernardins) and participated—through its team members—in more than a hundred conferences and workshops around the world.
Regarding professional achievements, the project has assembled a world-leading advisory board of multidisciplinary academic and industry experts to help promote best practices in blockchain governance, both academically and publicly. The project established institutional partnerships, notably, with the Project Liberty Institute, headquartered at Sciences Po, to further examine the governance practices of existing blockchain networks. The project also demonstrated academic prestige, with one postdoctoral researcher appointed to a long-term research position at the University of Vienna, and the PI being appointed as part-time Professor at Sciences Po in Paris.

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

1.. Shifting the narrative from blockchains as ‘trustless system’ to ‘confidence-building machines.’: Our research revealed that, while blockchain systems don’t require trust in a central authority, they involve multiple stakeholders (e.g. developers, validators, nodes, and users) with varying degrees of influence over the system. Trust is, therefore, never eliminated from the system, it is just distributed amongst a large network of actors that each try to influence each other.

2.. Unrevealing the tacit and invisible governance of blockchain systems through ethnographic methods. Blockchain technology is often portrayed as “decentralized,” however, technical disintermediation does not always lead to political or operational disintermediation. Conducting digital ethnographies of blockchain communities has enabled us to expose tacit governance practices and power relations that are “invisible” (i.e. are not expressed on-chain nor formally documented off-chain).

3.. Bringing off-chain governance at the forefront of governance discussions in the blockchain space. Blockchain studies have mostly focused on the design of on-chain protocols and token economics that entirely ignore the existence of off-chain governance. Our research has shown that the study of off-chain governance is crucial to understand the governance of blockchain systems, and to imbue them with the ability to uphold the fundamental principles of fairness, equality, and proportionality.

4.. Drawing from and extending constitutional theory to account for new forms of constitutionalization in blockchain systems. Our ethnographic research has helped us shed light on a recent phenomenon with blockchain systems operating not only via on-chain formal constitutions (code) and off-chain material constitutions (unwritten norms and rules) but also increasingly via off-chain formal constitutions (norms and rules reflected in written documents)—what we call Blockchain constitutionalism 2.0

5.. Promoting the concept of functional and regulatory equivalence in the blockchain space. Functional equivalence enables new technologies to be regarded as equivalent to previous technologies from a legal standpoint. With regulatory equivalence, the “means” by which a regulated activity is to be considered compliant with the law can be broadened. Through our work on the DAO model law, we have explored new ways to apply these concepts in the context of DAOs and other blockchain systems.

BlockchainGov team at EUI