Newsletter: Election special: When democracy goes onchain
Editor’s note: This post originally appeared in our newsletter — a guide to trending topics in crypto with insights and resources from engineers, researchers, and others on the a16z crypto team. Subscribe to see it in your inbox every other week.
Welcome to our elections special edition, where we cover the resurgence of interest in citizens assemblies, research into “liquid” democracy, advances in onchain voting, and more.
We’re just days away from U.S. elections on November 5, and an increasing number of policymakers and politicians have been speaking positively about crypto on both sides of the aisle.
Regardless of who wins office, many politicians expect bipartisan crypto legislation to be on the next government’s agenda.
a16z crypto State of Crypto Report 2024, p. 10
Crypto has become a key political issue. It’s on the ballot; go here for more election resources.
What happens when anyone can be your representative?
Andrew Hall
Lewis Carroll, a prolific researcher of voting systems (and author of Alice in Wonderland), first proposed something like so-called liquid democracy. The idea is simple: You can vote directly on issues, or you can delegate your vote.
Fascinating, but impractical in the 19th century. Today, though, computers and the internet have made it easier for communities to implement. Crypto projects have been putting the concept into practice — which has given researchers lots of data to assess just how well liquid democracy actually works.
Andrew Hall, Stanford political scientist and advisor to a16z crypto research, and fellow researcher Sho Miyazaki, collected onchain data from 18 Ethereum DAOs from January 1, 2021 through December 31, 2023.
Drawing on a dataset that covers over 250,000 voters and 1,700 proposals, here’s what they found:
- About 17% of voting power gets delegated
- Small token holders are more likely to delegate than larger token holders
- More active voters attract more delegations
- Building online tools to help voters find and evaluate delegates boosts participation by 25%
If crypto communities want to encourage more participation — a key milestone on the path to decentralization — Hall has a handful of suggestions that could move the needle. Among them:
- Build delegation hubs that help users easily delegate their vote
- Help voters make informed choices by clearly explaining what’s at stake
- Incentivize token holders to delegate and vote more often
Government… by lottery?
When experts can’t be trusted, draw lots.
The latest episode of web3 with a16z examines the ancient Athenian practice of “sortition,” which delegates decision-making power to random members of the public.
Sometimes called “government by lottery,” sortition — and the closely related concept of citizens’ assemblies — are undergoing a revival today as tech companies (like Meta) and AI startups (like OpenAI and Anthropic) use this method to shape their policies.
Sortition can apply everywhere, from the governance of countries to the governance of crypto projects. Joining us to discuss the trend are political scientists Bailey Flanigan (Harvard now, MIT next year) and Andrew Hall (Stanford).
Speaking of voting…
You can also visit our library of resources for all things voting and governance, including how systems can be gamed, how to make onchain voting more private, and more. Some of our other pieces on voting and technology advances include:
- Andrew Hall (you’ll recognize his name by now) presented preliminary results on his “liquid democracy” data, also featured above: Liquid Democracy in the Wild
- Peter Buissert (Harvard) shows the practical implications of ranked-choice voting, which is being implemented in local and state-wide elections: Politics Transformed? Electoral Competition under Ranked Choice Voting
- Bailey Flanigan (Harvard) talked about her work on sortition, or governance by lottery — an increasingly popular practice in online communities, including AI and crypto projects: Algorithms for Fair, Manipulation-Robust, and Transparent Sortition
🔮Election-betting market moves
Interest in prediction and election-betting markets has surged ahead of the U.S. elections. Kalshi, a prediction market platform that’s registered with the U.S. Commodity Futures Trading Commission, started accepting USDC stablecoin deposits on Monday, while Robinhood introduced election betting contracts on the same day. Meanwhile, an analysis of Polymarket found signs of wash trading on the offshore platform’s presidential betting market. (Fortune, Politico, Fortune)
💳 Real-time crypto purchases via debit cards
Visa and Coinbase are partnering to give customers with eligible debit cards the ability to deposit funds — sometimes instantly — into their Coinbase accounts. “The integration with Visa Direct gives our eligible customers real-time access to their funds for trading,” said Akash Shah, Coinbase senior director of product management. (Bloomberg)
🏛️ The jobs impact of SEC lawfare
The U.S. Securities & Exchange Commission’s approach to regulation-by-enforcement is costing the U.S. jobs. ConsenSys, maker of the MetaMask wallet, is laying off 160+ employees, in part because of SEC lawfare. “Multiple cases with the SEC, including ours, represent meaningful jobs and productive investment lost due to the SEC’s abuse of power and Congress’s inability to rectify the problem,” writes founder and CEO Joe Lubin. “Such attacks from the U.S. government will end up costing many companies…many millions of dollars.” (ConsenSys)
Changelog: Helios is now a multichain light client for Ethereum
What’s changed: We’ve revamped Helios, our open source light client, to make it agnostic to how blocks are verified, and added support for modifying the underlying execution environment to suit differences between rollups.
We’ve started with the OP Stack, meaning Helios can now sync on Optimism, Base, Unichain, World Chain, and anything else within the Superchain ecosystem. If you want to see it in action, try our live demo of Helios syncing on Ethereum, Optimism, and Base
What’s next: There’s a lot more to come here. If this excites you, learn more or contribute to the project:
- Go to Helios’s website
- Check out the GitHub repo
- Or get in touch with Noah Citron or Eddy Lazzarin
Upcoming events
event: Devcon 2024
date: November 12-15
teams attending: Deal, Engineering, and Research. Plus, Engineering Partner Noah Citron will be giving a talk on the future of light clients.
Open roles at a16z crypto
Also, our portfolio companies are hiring for hundreds of roles.
— a16z crypto editorial, research, and engineering teams
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