Why governance matters: Blockchain Governance with Peter Zhou and Max Ren

Why governance matters: Blockchain Governance with Peter Zhou and Max Ren

All projects and organizations need a governance system to make and enforce decisions. This is true whenever multiple actors collaborate regardless on whether it’s a governmental state, business or family. According to Thomas Cox (Chief Governance Officer at StrongBlock), In the case of blockchain, governance helps to deal with emergent issues that “transcend what the settled code can handle”.  

Different blockchains use different governance structures and during VeChain’s 8th webinar, Dr. Peter Zhou and Dr. Max Ren analyzed some of these processes and how effective they have been.

 

Bitcoin

As the first decentralized digital currency, Bitcoin was designed with free governance structure to avoid entities gaining too much power and authority and, ultimately, giving control to the users. Not having a systematic way make decisions, however, has led to inefficiencies and community conflicts. As an example, Dr Max Ren referred to the disagreements that occurred when dealing with Bitcoin’s scalability limitations. While different solutions such as increasing of block size or the lighting network are available, opposition and conflict of interest between core developers and miners has slowed the deployment of Bitcoin Improvement Protocols (BIP) and resulted in forks such as Bitcoin XT or Bitcoin Cash.

 

Ethereum

Ethereum on the other hand has a more methodological decision making process. New features are submitted to the Ethereum Improvement Proposals (EIP) repository, which are then discussed in the Fellowship of Ethereum Magicians forum and (with enough support) considered for development during All-Core-Devs Meetings. Core developers have the final say and decide whether a proposal is to be implemented or rejected by carrying a “rough consensus”. This gives developers significant power and, while not all of their identities are known, having a clear roadmap, the existence of the Ethereum Foundation and the presence of figureheads like Vitalik Buterin has helped guide the community and give direction to Ethereum’s growth. According to Hudson Jameson (Developer Liaison at the Ethereum Foundation), the community is also “taking up the torch to decentralize processes“.

Blockchain Governance

Ethereum Governance

 

EOS

EOS governance is influenced by its Proof-Of-Stake mechanism. In the network, 21 block producers are elected by token holders and given authority to confirm transactions.

Initially, EOS governance was set by rules in its Block Producer Agreement and Interim Constitution. According to the documents, block producers could only execute valid orders passed by the EOS Core Arbitration Forum (ECAF), which in turn was responsible for dispute arbitration and resolution. In June 2018, however, the constitution was breached when block producers decided to protect users from bad actors by freezing 7 accounts without prior ECAF consent. In the same month, a forged ECAF order requesting the freezing of 27 additional accounts was also discovered; creating internal conflict and causing the community to question the effectiveness of its governance processes. As a result, block producers eventually replaced the constitution with the EOS User Agreement (EUA) which, while it removes enables smoother decision making by removing the ECAF, does not include a “No Vote Buying” clause and gives block producers significant control voter the network. This has led to concerns about centralisation and collusion as reported in a recent Binance Research article.

Blockchain Governance

EOS Initial Governance

 

VeChain

VeChain’s governance model has been designed to balance decentralization with effective decision making. At its core, a stakeholder elected Board of Steering Committee is responsible for overseeing daily operations and resolving emergency situations.Token holders, however, have the final say on the implementation of fundamental changes.

New features can be proposed by both the Committee and the community (e.g. VIP-191 proposed by Totient) but need to be approved by a supermajority of Steering Committee members. Approved proposals are then presented to the community where Authority Masternodes and token holders with voting rights (i.e. node holders) can decide whether the to accept the new features. If the community does not agree, the changes are not integrated into the blockchain. To mitigate the influence from bad actors voting rights are only granted to long-term token holders that stake a minimum amount of VET for a minimum amount of time (allowing them to upgrade into a node). Depending on the amount of VET staked, users can upgrade to different nodes carrying varying voting power. This helps maintain voting integrity and ensures voters have the ecosystem’s best interest.

Blockchain Governance - Vechain's Governance System

VeChain Governance

VeChain’s governance structure allows fast action to be taken during emergency situations while keeping ultimate control with its users. The system proved to be effective when 1.1 billion VET were lost in December 2019. In response to the theft, the Steering Committee was able to immediately mobilize, contact the relevant stake holders and jointly release an emergency patch to freeze the stolen tokens. This helped mitigate the issue and by letting the community vote whether to permanently implement the temporary solution, token holders were able to decide the networks future, maintaining the blockchain’s integrity and decentralization.

To protect community voters from harassment  or being influenced to make certain decisions, VeChain is also developing an e-voting solution that will protect their privacy.

It is important to note though that network upgrades are still carried by VeChain core developers and therefore, for VeChain’s governance to succeed, the Foundation, Authority Masternodes and the Steering Committee’s actions need to remain transparent, ethical and accountable towards the community which so far appears to have been the case.

There is no perfect or “one size fits all” governance structure, however, VeChain’s system appears to be ideal for its enterprise-centric applications. Having an unstructured governance like Bitcoin could lead to slow upgrade implementations and inefficient decision making (turning businesses away). By balancing the role of the Board of Steering Committee and all stakeholders, VeChain gives users control over the network while being able to also take fast and effective actions to respond to sudden issues.

A recording of the video can be found below:

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Humans of Blockchain: Peter Zhou

Humans of Blockchain: Peter Zhou

Humans of Blockchain is our initiative to highlight the human side of the industry and showcase blockchain professionals around the world. The goal is to get to know the people pushing blockchain forward better and understand them at a personal level. Our previous post in the series was on Dimitris Neocleous and can be read here.


If there is a person that pops into mind when talking about VeChainThor’s technicalities, that is Dr. Peter Zhou.

With a PhD in Computer Vision and Gait Recognition from the University of Southampton, Peter has 10 years of experience in computer science research and development. As VeChain’s Chief Scientist and member of the Foundation steering committee, amongst other things, he is responsible for VeChain’s R&D efforts, university partnerships and IP protection.

Passionate about technology, he often shares his thoughts and knowledge on Medium, hosted a PoA2.0 – SURFACE webinar with Dr. Zhijie (Max) Ren and will be holding a third webinar on “Blockchain Governance” this coming Wednesday 22nd July 2020.

News and announcements usually cover VeChain’s business development achievements and we rarely hear about the people improving VeChain’s infrastructure and driving blockchain innovation behind the scenes. In this episode, Peter shares with us what it means to work with VeChain’s core developer team and why he is excited about blockchain technology.

Tell us about yourself and how you got into blockchain

I was first aware of Bitcoin in late 2016. Because of my curiosity of new technology, from time to time, I started to do my own research on bitcoin and later on shifted my attention to the more general subject of blockchain. 

It was until I met Sunny and Jay and had some inspiring conversations with them that I realized blockchain’s true potential to change our lives. When given the chance to join VeChain, it didn’t take me long to decide to join the team to start a new chapter in my life. 

Another important reason I got into blockchain is due to my long-time wish to be involved in developing technology that can be truly mass adopted and have significant business and social impacts. Blockchain is definitely going to help me achieve my goal.

You were previously a research scientist at the University of Oulu and University of Kent. Can you tell us more about it?

After I finished my PhD, I moved to the University Kent to join the European project called “3D Face” in 2007. It was a pioneering project that tried to use 3D facial information to enhance face recognition performance 10 years ago, despite the fact that 3D info has been regularly used for face recognition nowadays. 

After the project, I joined the machine vision research group at the University of Oulu, Finland. My research was part of the project “Affective human-robot interaction” and was focused on a specific research topic called visual speech recognition. Simply speaking, it is about recognizing what we speak by looking at the motion of our lips and tongues.

How did you find the transition into the business world? Were there any particular challenges?

Overall, the transition is challenging and still ongoing. Personally, I quite enjoy the process because it constantly pushes me to learn, innovate, reflect, and be a better person.

In academia, my sole aim, as a research scientist, is to advance the existing knowledge and technology in a certain research area. However, it is no longer the case. The biggest challenge for me has been to figure out how to fit in the role of the chief scientist with the goal of maximizing business and ecosystem values for VeChain. 

Compared with other CXO jobs, the chief scientist is a role that is less defined and more versatile. I’ve been doing things such as identifying and conducting crucial research work with a limited budget, communicating with/educating the community and general public, bridging our business and technical/research team at both directions, strategic thinking/planning, etc.

What are you most proud of about VeChain and why?

I am most proud of the determination of the VeChain team for our goal of mass adoption of blockchain technology.

We all know that things are changing extremely fast in the blockchain world. I’ve seen teams starting with a very ambitious goal, but distracted and eventually lost during the market pumps and dumps later on. 

We have been through the same kind of craziness, however, we have never forgotten the goal set at the very beginning. Of course, there have been many setbacks, but the team has been determined and kept going forward.

What has been the biggest challenge your team has had to face and how did you overcome it?

The biggest challenge is to convert research outcomes into real products. The difficulty is often caused by the knowledge gap between researchers and software developers.

On one hand, researchers are good at prototyping systems, but lack experience of real product development. On the other hand, it’s difficult for software developers to fully understand the theoretical significance and delicacy of certain solutions researchers come up with.

The way to overcome it is to have someone on the research side (very often it’s me) to go deeply into the technical details of the existing software system and then to bridge two sides through many constructive communications and discussions before and during the actual development.

What is VeChainThor’s current technical priority and how is the foundation approaching it?

The current technical priority is to make VeChainThor more secure and scalable, capable of supporting future growth of the VeChain ecosystem.

The team is currently working on upgrading the consensus from PoA1.0 to PoA2.0 that is theoretically more secure and scalable. We are also investigating solutions to the interoperability between blockchains using PoA2.0 to further increase throughput and expand the use-case scenarios.

Peter Zhou at a Google campus

The general public is becoming more aware of the benefits of blockchain. When do you think the technology will become mainstream and why?

I think that blockchain technology will become mainstream in the next five years. 

With the general public understanding more about the benefits and importance of blockchain tech, they are going to more likely accept and purchase products that use the technology. It will certainly push more and more enterprises to adopt blockchain tech. Being mainstream does not mean that most of us would start to use digital wallets and use dapps all day long. It means that our daily activities would somehow depend on blockchain although we might not directly feel or see the existence of blockchain. Products such as the VeChan ToolChain will certainly act as a catalyst to speed up the adoption.

Where do you see VeChainThor in 5 years? What is your long term vision and how is the team planning to achieve this?

I can see in the next five years VeChainThor emerging as one of the major public value-chains associated with real-world business activities worth billions of dollars. My long-term vision is that VeChainThor is to become a global infrastructure-level decentralized data engine to facilitate business activities everywhere. 

Our blockchain will be constantly absorbing fine-grained business data labelled with confidence levels issued by assurance companies such as DNV-GL. These data will not only support the daily business that relies on the immutability and quality of the data, but also enables a highly efficient data market that incorporates AI and big data technologies. 

The team is currently building the foundation for the future. For instance, we are upgrading the mainnet consensus for better security and scalability; we are building ToolChain for engaging more businesses; and we are working with DNV-GL to start data verification (labelling).

What other blockchain projects excite you?

VeChain is always the best to me in terms of mass adoption of blockchain technology. From a purely technical perspective, I am also excited about Ethereum and Libra.

How would you describe yourself in 3 words?

Curious, adaptive and determined

What would be your superpower?

Teleportation

What is your guilty pleasure?

Playing with my daughter’s legos to build stuff

What are your hobbies?

Playing violin (learning together with my two daughters), reading and soccer

If you could go back to any moment in history where would you go?

I’d like to go back to witness the very beginning/birth of the mighty Bitcoin.

Who is your biggest inspiration and why?

My grandma. I lived with her for a couple of years at my very young age and we had been very close since then until she passed away. 

Grandma was an ordinary woman. She didn’t have a chance to attend schools, lived on a tiny pension, and didn’t have any impressive skill. However, her love for the family, optimism about the future and determination to overcome difficulties had constantly inspired me and shaped my personality somehow.

A fun fact about you?

I persuaded my daughter (by ice creams) to be my weight disc when the local gym was closed due to the pandemic.

What is the most adventurous thing you’ve ever done?

At age 6, I left my home alone without telling my parents, walked about half an hour from home to a bus stop and took the bus to my grandparents’ home which was a dozen stops away.

What was your first computer?

The Intel 486

Thanks to Peter Zhou for taking part in this article. We hope you enjoyed it.

If you would like us to profile someone in particular who is helping drive blockchain forward, let us know on Twitter and we’ll do our best to make it happen.

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What to expect from PoA 2.0-Surface and VeChain’s current technical advantages

What to expect from PoA 2.0-Surface and VeChain’s current technical advantages

As more companies join the ecosystem, it is increasingly important to ensure that the network can cope with high activity growth. With this in mind, VeChain is consistently improving the technology behind VeChainThor; currently developing a new consensus algorithm and having at least 42 patents around the world.

In VeChain’s 6th Bootcamp, Peter Zhou – VeChain Chief Scientist – and Zhijie (aka Max) Ren – VeChain Senior Research Scientist – addressed some of the most common questions and shared what to expect from the new PoA 2.0 – SURFACE.

 

What is PoA?

VeChainThor uses a Proof-of-Authority (PoA) consensus; where one of the 101 pre-approved validators (Authority Masternodes) are randomly selected to generate the next block. The model avoids computational competition and enables a faster and more efficient block production. The limited number of “miners”, however, creates centralisation concerns which, according to Peter, is a misconception. As demonstrated by him in the chart below, depending on the perspective, the presence of mining pools in other blockchains actually makes them more centralised than VeChain.

VeChainThor’s scaling solution: It’s all about quality not quantity

There are many ways to scale a blockchain network such as increasing the bandwidth, increasing the block size and/or block frequency, sharding, etc.

VeChain, however, opted to optimise bandwidth with its PoA 2.0 SURFACE (Secure Use-case-adaptive Relatively Fork-free Approach of Chain Extension) consensus.

When a new block is created, time is used in communication overheads, transmission and validation of data, and reaching a consensus to elect the next node to generate a block though. By maximising the percentage of time spent in transmitting data (blue part), more transactions can be included into the block, raising the number transactions per second (TPS) and improving bandwidth efficiency.

Consensus under PoA 1.0:

Consensus under PoA 2.0:

To reduce achieve this, PoA 2.0 proposes the following changes:

Delayed validation: instead of validating the block in the consensus round it is generated, validation is delayed to the next round. This allows the network to transmit and validate blocks simultaneously and in parallel; essentially saving time.

Epoch based random beacon scheduling: instead of deciding on “real-time” which node will generate the next block, a schedule is randomly created in advance (for example one day beforehand) to decide which, and in which order, Authority Masternodes will produce new blocks. This eliminates the time wasted in reaching a consensus every time a block is created.

Relatively fork-free approach: when a new block is generated, it takes time for the block data to reach the Authority Masternodes. Since Masternodes are kept in different locations, they receive the information at different times. By removing block validation and the consensus process from the “round”, the new data doesn’t have enough time to fully propagate, leading to asynchrony problems between nodes and giving the chance for a malicious player to fork the chain and double spend. To avoid this, PoA 2.0 introduces a verifiable random function (VRF) mechanism whereby blocks need to be endorsed by a randomly selected smaller pool of Authority Masternodes to be confirmed. This helps dilute the power of the singular Authority Masternode creating the new block and can potentially reduce the probability of malicious forks to 1%.

To find out more about PoA2.0 SURFACE visit VeChain’s Medium announcement and the preprint paper

A business perspective of VeChainThor

 

Many businesses have moved away from Ethereum onto VeChainThor, including Deloitte, Fresh Supply Co and Real Items.

During VeChain’s 7th webinar, Ken Woodruff -co-founder and CTO of Real Items- shared the main advantages VeChainThor brings to his firm.

 

What is Real Items

Real Items aims to bridge the gap between blockchain and consumers, focusing on easy user onboarding and usability. To this goal, they have created VeChainThor integrations for some of the most popular online platforms, such as Shopify and HubSpot, and are currently developing new WeChat, WooCommerce (WordPress) and DeFi enabled supply chain management solutions.

 

VeChainThor’s competitive advantage for enterprises

For Ken, some of the main benefits of building in VeChainThor are:

  • Two-token VET/VTHO model – helps to keep stable and predictable fees (essential to forecast and manage business risks)
  • Multi-Task Transaction (MTT) – allows the ordering and bundling of item creation into one transaction. Simplifying the process and reducing transaction costs
  • Fee delegation – enables sponsors to pay for transfers fees on behalf of users, avoiding customers having to manage cryptocurrencies (vital for enterprise adoption). Currently, fee delation is used in more than 90% of clauses
  • Fixed 101 Authority Masternodes – leads to consistent and predictable block time (10s), allows faster sync between nodes and allows quicker core feature development cycles and hardware and software network updates
  • Solid APIs – ability to work with easier Connect and JAVA API
  • Easy access to VeChain core dev team – allows developers to readily receive technical support when needed
  • VeChain Foundation backing – financial support from the foundation in the form of VTHO donations when milestones are achieved

Percentage of fee delegation clauses in the last 10 days. Credit to VeChainStats.com

VeChain prides itself for being the leading enterprise blockchain platform and businesses are at the core of its innovations. With an ambitious goal to drive mass adoption, it’s great to see that them back their words with actions and have enterprises validate its business friendly ecosystem.

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