Silvio Micali's (Algorand Founder) Decentralized Governance Proposal 11-24-2020


Since blockchains live in a highly adversarial environment, is it worth taking into account attacks to the governance (e.g. collusion and corruption) as well as attacks to the consensus?


Attacks to the consensus is what the entire consensus model is created for - handling various mechanisms of attack. If every actor in the system were assumed to be honest, then these systems would be far, far simpler. :grinning:

Governance will presumably be just transacted contract operations submitted by governance account holders and protected like any other Algorand transaction.

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Attacks to the consensus is what the entire consensus model is created for - handling various mechanisms of attack. If every actor in the system were assumed to be honest, then these systems would be far, far simpler. :grinning:

Yes, of course, I know that. I wasn’t questioning the meaning of consensus protocol here.

Governance will presumably be just transacted contract operations submitted by governance account holders and protected like any other Algorand transaction.

The point is: is there any possibility for a group of governors to collude and vote for governance decisions that can potentially undermine the ecosystem?

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The decentralization of the governance is a very complex issue, I believe. Starting with funding of grant proposals will simplify and will measure the level of participation to see if an expansion is feasible. An informed participation will require a serious prior preparation.


It seems that if the first round of voting will be regarding funding of projects collusion is a real concern. Though in the example it had half of the circulating algo locked in for governance (if I read it correctly). If this is the case collusion would be nearly impossible.


I would like to see a tiered approach based on the length of time a person is willing to lock up algo. Increasing rewards for increased time. On the other hand, it would open up the possibility of the same group of people making decisions for an extended period of time and I don’t know if that would be a good thing either. And with weighted voting depending on the amount of algo locked up a hierarchical voting structure is created from the beginning. I understand those with more skin in the game should have a louder voice, but on the other hand it seems antithetical to decentralized. I believe the percentage reward should be justification for locking up more algo rather than the weight it gives your vote. Admittedly, I could be far off in my understanding of how this will work.


*The document does not specify it clearly but I assume that the funding of grant proposals will be done in an automatic manner. For example, when a proposal wins, the required funding in ALGOs will be transferred to the proposal’s account automatically by a smart contract.

In my opinion, the role of foundation in this proposal should be revised:

The foundation has no way for safeguarding the protocol against unpredicted attacks.

For example in K-out-of-N voting, governors can vote for any k items they like and by vote of 25% of the governors any item can be added to the voting session. In case a large number of governors misbehave there will be no safeguards. Don’t forget that we are still experimenting this governance protocol and there should be some type of safeguards against unpredicted situations.

It seems that in this proposal, the role of foundation is mostly providing information. There is no need to define this role inside the protocol. Foundation can advertise and provide information using blockchain or social media. There is no need to designate it inside the governance protocol.

The liveness of the protocol is dependent to the existence of the foundation.

How this protocol will work if foundation is shut down by the government? I think many parts of it can not work smoothly. There will be no one to choose the voting items for voting sessions. There will be no one to choose the rates in dutch auctions, etc.

Instead of this, If the foundation had some kind of veto power, I think that could be more useful. Veto power could safeguard the protocol and at the same time the protocol would not be dependent to the existence of the foundation. That veto power could be lifted after a certain amount of time, for example 5 years.

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I believe that the emphasis should be almost exclusively on incentivizing participation by the individual in governance. This would certainly motivate the maximum number of individuals to participate on a frequent basis, thereby making it nearly impossible for some small group to make large, quick moves that are very disruptive. It is only through widespread, dedicated individual participation in the governing of our own lives that we can achieve true freedom.

Or something like that.

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I am new to Algorand and would like to participate in this governance program. How does one go about starting that process?

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Hi @2ball, I’m Johanna, community lead in Europe for Algorand Foundation. To answer your question, we’re currently building out the governance program, and in advance of the shift to governance rewards, the Algorand Foundation provides participation rewards to holders of Algo. Please visit to see how easy it is to receive participation rewards. In the meantime I’d recommend the Discord channel below as a good starting point:

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We are pleased to announce our proposal for the long term governance of the Algorand ecosystem. The Decentralizing Algorand Governance proposal is available in multiple languages on our website. Please stay tuned for additional news to come.

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Dear Silvio Micali,

great job on creating the algorighm for the concesus… Few years ago I also wanted to start the blockchain like algo which would not work on mining, but in my opinion it was supposed to work on legal consensus of users…

I would like to quote from the proposal:

Currently, in Algorand, every account can participate in consensus, but not governance. Governance is the power of deciding non-consensus tasks, the funding of grant proposals being an example.

Your idea for this blockchain is quite good, but actual progress is quite bad. I am CTO of regulated exchange, and i requested funds from the fundation. Also we have created application for covid testing and we have tested approx 400 000 people now.

Employees of algo foundation made it quite clear for me to be demotivated.

Because you mention the funding of grant proposal through governance protocol i very doubt it will get any better… Who owns the algos now? I believe the majority of algos is owned by people who started the project. 2.7 billion algos are there and there is no transparencny on who owns how many… 19th JUNE 2019 122,400,000 were given to investors at 2,4 … that is 51 000 000 ALGOs… you claim to give 200 000 000 algos each year for grants… Who owns rest of 2 000 000 000 algos?

I have quite high doubt also about funding the nodes… You fund only nodes which you consider to be core nodes and you do not allow anyone else to be funded by this mode. On the other side the indexer nodes which has the highest value added are not funded anyhow.

If the governence will be ruled by the initial stakeholders, what is the point of this? Now it is bad, what will happen if more monopoly will get into it?

People who has money will want to gain more money. Rich will get richer by influencing the environment around them… Is this really your vision?

So in my example, if we as the regulated exchange want to request money to do the research to be on the safe side of the law, and do not get any grant from algo foundation now, how will be able to get some funds after some group of people will be governing who will get the money? My answer is that they will get the grant money for themselfs.

In the other example… If there is an application which can do real good for humanity such ast covid testing application, and you refuse to finance some update to be able to use algos for signing and verification of results, i really dont understand what you are trying to achive here… If algo foundation does not do its work now, how will it work after your governence vision will be in place?

Note that there are other flows… For example algo wallet is not public?? Are you afraid of your random function to be broken and by iterating the seed will be able to reconstruct existing wallets? Or why you do not want to publish it? (sorry for the expressive language, i know you want to publish it, but did not gave any terms nor you respond for any help with translation support)

Will this be subject of this governence?

For me not just to complain but also suggest some solutions

  1. When stating some terms, please be more specific… Never use term will happen in future without specifying the at least time range
  2. Please make a simple table of grant receivers with name and amount … i know that those 200M per year is not much in the scope of 2.7B algos in circulation, but you can do this at least…
  3. Other forms of grants such as support for Nodes should be much more transparent…
  4. Please make the algo wallet source public … I really want to see slovak translation there, as well as public source makes it much better to check for security concerns
  5. What about some decentralisation of power? For example if riccher would gain less rewards then poorer I believe that it would be much more fair…
  6. I believe that the fee should be now decided to be for example 0,001 algo now, 0,0001 algo in two years, 0,00001 in 4 years and 0,000001 in 6 years… The reward of this fees should be divided between those who provide technical support so they pay for HW and bytes transfered, and the staking rewards… This would also give people incentive to build on algo network as they will see that even if the price goes 1000times up, it will not ruin their business case…

I hope Silvio that you read this forum, or that this message will find you well… The purpose of this message was to pinpoint some flaws that are currently in algo and proposals how to solve them.

Dear Prof. Micali,

I think @scholtz has raised very good points above, about the “rich get richer” syndrome, and also about the lack of empathy and the lack of flexibility in his case of his modification requests, to make use of the Algorand blockchain to something as important as Covid testing. (Also, it would have been a great publicity value for Algorand Inc. and Algorand Foundation.)

I think there is a general lack of transparency, financially as well as technically.

2.7 billion algos are there and there is no transparencny on who owns how many…
Yes, you are the creator of all this network, and you have the right to decide things quite naturally. But then please leave this bullshit about transparency, transparency reports, and like.

I think governance is great, but how will the governors decide without the detailed technical roadmap of Algorand? Another possibility is that the governors will decide about “bicycle shedding” and nothing really important. Is there a technical roadmap for Algorand? Can it be published?

Best regards,

I too agree, that a general reward structure for incentivizing decentralization should reward rich less than the poor (relatively speaking).

One such incentive structure is to not reward users proportionally to their existing holdings, but proportionally to the square root of their holdings. This would still lead to bigger absolute rewards for higher account balances, but due to relative returns declining for larger balances, it would incentivize a lot of people to have some, without incentivizing anyone to have a ton.

The same idea could be used to decentralize (democratize) governance too, by setting voting weights to be proportional not to the users account balances, but to the square root of the account balances.

On a protocol level however, I don’t know how something like that would even be possible. If the protocol only sees wallets or addresses, then anyone could trivially increase their rewards or voting weights simply by splitting their algos into as many separate addresses as possible, instead of keeping them all in one.

How about a maximum amount of money that’s allowed to cast a vote from one address? A person with billions of ALGOs would be heavily disincentivized to split their algo into hundreds of thousands of accounts, but it wouldn’t affect the large majority of the population. A “real” person probably has only 2-3 accounts

I think you are underestimating the billionaires’ will and ability to do just that.

So in my opinion your proposal suffers from the exact same problem as mine, and I don’t think there is any solution to that.

But we can certainly hope that any non-protocol-based decisions, such as the grants given by the foundation (or the future governors), will consider this in their decisions and try to get as many developers, participants, and Algorand advocates involved as possible.

Actually there is… You can verify person identity by class3 certificate signature… For example in Slovakia every person who gets the national ID card has Qalified certificate in it… It is practice for almost ten years now so every Slovak can do official EU authentication or QES.

If you consider matching every balance to the physical person, some very rich people might get unappropriate costs to scale and negotiate this with persons… Even if he does this, these people shall receive the reward, thus he split his rewarded money between wider audiance and this is the point of this…

It is possible, the real question is what people with a lot of algos on their balance will want to do? I doubt they will not want to get richer faster…

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That’s a great point!

I didn’t know about the Slovak ID card, but for development purposes I have one of the Estonian ID cards (Estonian identity card - Wikipedia) that sounds more or less the same as yours. They’ve even used the ID card to allow online voting for almost 15 years now I believe, and more recently opened it up for foreigners too via e-Residency (, which is pretty amazing if you ask me.

I myself am based in the U.S. though, and not only do we not have electronic ID cards of any kind, but millions of Americans don’t have any kind of government ID at all. We are not just a decade behind Europe in that regard, but more like a century.

But now that Estonian e-Residency came up (and other similar electronic ID cards such as the Slovak one), which would allow one-to-one mapping between a digital identity and an actual human being (almost) anywhere in the world, I realize the huge potential it has in areas such as decentralized governance. I would love it if Algorand was the pioneer in adopting it!

To continue on the topic of mapping digital identities to actual persons, I coincidentally just received an email newsletter from Democracy Earth that mentioned Proof of Humanity ( as their approach to the same problem.

Might be worth checking out if anyone’s interested in the topic. Although given that it requires “someone who is already in the list to vouch for you”, I personally just can’t see myself ever using it (and not yet convinced it could be trusted either).