Research project

Investigator:
Yoan Hermstrüwer

Abstract:

Blockchain technology is hailed as a liberating force of the digital age. Decentralized consensus mechanisms and the security of the public ledger, the argument often goes, will pave the way towards more inclusive forms of collective decision making, boost turnout in electronic voting systems, and eliminate safety concerns over digital democracy. With chains considered as unalterable under existing consensus mechanisms, such as proof-of-work and proof-of-stake, neither electoral fraud nor the abuse of power differentials seem to pose a risk any more.

In this project, I put a question mark over these claims. On the one hand, the democratic potential of blockchain technology will depend on the evolution of consensus mechanisms and the technological design of voting procedures. Under proof-of-work protocols, power accruals to mining pools are already visible. And it is far from clear how the evolution towards proof-of-stake protocols will affect stakeholder incentives and the likelihood of forks in the long run. On the other hand, the potential of blockchain democracy hinges on the behavioral impact of the voting rules guiding blockchain governance. Voters, including token holders, have an incentive to maximize their own payoffs without regard to the public interest. Moreover, it remains unclear whether blockchain voting can live up to democratic principles when competitors acquire tokens to accumulate voting power or when voter authentication is not guaranteed.

The objective of this project is to identify the potential and the pitfalls of democratic decision making on the blockchain. The analysis will proceed on the grounds of a legal comparison and shed light on the differences between existing laws undergirding electoral systems and blockchain governance in the EU and the US. In addition, the analysis will build on an institutional comparison of different blockchain voting rules. Taking a market design perspective, this comparison will focus on the potential of alternative voting systems, including voting default rules and quadratic voting rules.