DeSoc’s Dark Heart

There has been much talk recently of <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4105763" rel="noopener ugc nofollow" target="_blank">a new paper</a> by Weyl, Ohlhaver and Buterin on soulbound tokens and their use to create Decentralised Society or DeSoc. The paper provides a potential way of powering web3 by virtual of tokens that are attached and used to establish unique identities on the web. That sort of thing is critically important for web3 <a href="https://medium.com/@joshgans/web3-isnt-going-to-work-without-identification-6aa776d674" rel="noopener">as I discussed here</a>. But read the paper carefully and there is worrying element with regard how it might use those identities in practice. It starts with the common issue that many who push for blockchain solutions to things worry about … decentralisation. <blockquote> When analyzing real-world ecosystems, it is desirable to measure how decentralized the ecosystem actually is. To what extent is the ecosystem truly decentralized, and to what extent is the decentralization “fake” and the ecosystem de-facto dominated by one or a small set of coordinating entities? </blockquote> The reason this is a concern is that the whole point of establishing unique identities is so that governance is not subject to coordination. In blockchain circles one such concern is the 51% attack where a single entity controls the majority of the ‘votes.’ But there is more than that: <blockquote> For example, nominally independent firms may have many major shareholders in common, have directors who are friends with each other, or be regulated by the same government. In the context of token protocols, measuring decentralization of token holdings by looking at on-chain wallets is wildly inaccurate because many people have multiple wallets, and some wallets (e.g., exchanges) represent many people. Moreover, even if addresses could be traced back to unique individuals, those individuals could be socially correlated groups prone to accidental coordination (at best) or intentional collusion (at worst). A better way of measuring decentralization would capture social dependencies, weak affiliations, and strong solidarities. (emphasis in original). </blockquote> To do this the authors propose “a protocol [that] could examine the correlations between SBTs held by different Souls and discount votes by Souls (pooling them as only partially separate) if they share a large number of SBTs.” What do they mean by this? There isn’t much discussion but what they mean is plain for all to see in the mathematics left in an appendix to the paper. <a href="https://joshgans.medium.com/desocs-dark-heart-e20448866363">Read More</a>