How would you game the arbitration system? It's no so easy as you might think

This was originally posted in Reddit, so check out also the discussion in there.

There has been a lot of discussion about governance and arbitration due to the emergency freezing of some accounts by BPs. This whole thing is so new that a lot of people don't really understand it, which has caused a lot of FUD and skepticism.

My initial reaction to the EOS governance model was also very skeptical. "Oh shit, this is not going to work and Dan will waste his time trying to build that kind of system!" But over the last year I've completely changed my opinion. I've seen how the procedures and institutions have been designed very thoughtfully. "Damn, this could actually work very well!"

One of the most common reaction has been: "If BPs have the right to freeze accounts, they have the right to do whatever they want!" But that's not how it goes. BPs have the power to make emergency freezing if there is a risk of somebody losing their money or account. This is only temporary action to give time for arbitrators look at the case and decide if there is actually something wrong going on.

When BPs make an emergency freezing, they also open a case against themselves in the arbitration forum to find out whether or not it was the right thing to do. If they have frozen an account without good evidence of emergency, they might be liable for harm that is caused for the account owner.

The person who demands emergency freezing might also end up paying compensation in the case, for example, if the need for freezing was based on fake evidence. Both BPs and arbitrators will take these kind of cases very seriously.

I'd like to hear from anybody who thinks this case of emergency freezing, that we just saw, was really bad for EOS. I have a feeling that most people think the system can be easily gamed and it will cause harm to members of the community. So let's hear some example cases and talk how the system should work and what could go wrong.

Represent a hypothetical case which you think will show how the system will create a bad or unfair outcome.

We can try to correct misunderstandings, and find out if there are holes in the system that can be used by bad actors, so we can fix them before they are used for bad things.

Comments

  • Ch3loo19Ch3loo19 Posts: 2 Brand New
    edited June 19

    Going to play devil's advocate and highlight some assumptions that I think we are making. I think it's important to raise questions about such assumptions on whether they are likely to hold in practice (even though they may be intellectually appealing from a theoretical standpoint).

    "If BPs have the right to freeze accounts, they have the right to do whatever they want!" - I agree this is an exaggerated statement. What happened today was indeed impactful, but I think we might be too quick to judge on whether it is a positive omen. BPs have taken a (right?) decision in the absence of arbitration. To me, the fact that there was no one capable of ruling on this decision was indeed the salient point, an absence which should be immediately addressed - but this is besides the point. Effectively, the BPs have taken the role of judiciary as well as the executive, a combination of authority which many would rightly criticise as excessive and dangerous. On the flipside, it expedited their action. If you disagree with this theoretical point of view, then we should be asking ourselves, what's the point of (eventually) having arbitration at all if BPs can innocuously assume the role of adjudicators as well?

    "When BPs make an emergency freezing, they also open a case against themselves in the arbitration forum to find out whether or not it was the right thing to do." I think here we rely on the assumption that there are sufficient punitive mechanisms in place that the constituency (community) can utilise to discipline and replace incompetent or self-serving BPs. Theoretically, the voting mechanism presents such an opportunity. In reality, however, this mechanism may be unfortunately too limited. EOS is not a democracy, but a plutocracy*, which means that a small group of wealthy players can collude to maintain a non-deserving BP in place. We need only look over the past week at the voting results to see how BP candidates without even a functioning website or who contributed minimally to the EOS environment** became BPs or backup-BPs.

    To underline, I do NOT think that the emergency freezing was bad for EOS. The BPs did what they could given the present circumstances. However, I'm hoping that in the future a more established procedure can be followed, one that involves a separate and independent judiciary system.

    I'm happy to receive counter-arguments, and please understand that I believe EOS to be a very promising and worthwhile project (hence why I'm putting time into writing this). It is in no way an overstatement to say that EOS is the 'birth of nation'. How momentous is that?!


    (*Some people display a strong dislike for this term and prefer to liken EOS to a "shareholder system". I'm not going to debate nomenclature. A rose by any other name... :smile: )

    (**I admit this is biased, but I think it resonates with a lot of people in the community. At the point of writing this comment, I am rather disappointed with the voting results. But, hey, voting is continuous after all...)

  • SamupahaSamupaha Posts: 51 Jr. Member - 1/5 EOS Tokens

    BPs have taken a (right?) decision in the absence of arbitration. To me, the fact that there was no one capable of ruling on this decision was indeed the salient point, an absence which should be immediately addressed - but this is besides the point. Effectively, the BPs have taken the role of judiciary as well as the executive, a combination of authority which many would rightly criticise as excessive and dangerous.

    It's important to look at what BPs actually did. They didn't transfer any tokens or changed any keys. Ownership of property was unchanged. What they did was basically just "from now on, we are going to ignore transactions from these accounts". So they didn't execute any action, instead they declined to execute certain actions. That's important distinction here.

    This is in harmony with the Constitution. It emphasizes property rights. It says that no transaction should take place without consent of the account owner. There was concrete risk of nonconsensual transaction to happen, so BPs took preventive measures.

    I think here we rely on the assumption that there are sufficient punitive mechanisms in place that the constituency (community) can utilise to discipline and replace incompetent or self-serving BPs.

    From Dan's newest blogpost: "EOS is designed to focus on restorative restitution rather than punitive retribution."

    Many people, including me, are instantly willing to punish anybody who does something wrong. But Dan's take on this is pretty insightful. Instead of thinking of "how to make the bad guy suffer" we should think "how to make the situation right". If somebody did something wrong, we should ask "what he has to do to undo the harm".

    Of course, we should keep eye on most frequent wrongdoings and try to prevent them in different ways. Reputation will have a huge part in the EOS ecosystem.

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