This is a result of work from the last couple of months. My previous blog posts touched on these ideas here and here. This paper unites ideas in these posts. It's about how fractally process can be used to decentralize blockchains and create an incentive loop between fractal contributors and BPs. It's relevant to any DAO that seeks to gain real footing in the governance process of the underlying chain. Here's the abstract:
Block production and governance power in blockchains tend to get centralized over time. This has implications for security as well as performance of the whole chain. Fractal governance, pionered by EdenOnEOS and fractally, is an alternative governance process that could be used to govern the chain and fix these issues. But block producers of the underlying blockchain would have to yield their power, which, this paper argues is quite unlikely. Instead this paper proposes an alternative path which would use purely economic incentives to influence on-chain governance. We argue that a staking smart contract that rewards staker, which selects best performing contributors in fractally consensus process but who has to vote in the underlying on-chain governance the same way that selected fractal contributor votes, can be used to influence on-chain governance and improve quality of the whole chain. In the process it would make BP reward distribution in the underlying chain more fair, create additional funding mechanism for contributors, and incentivize participation in fractal governance. Overlay protocol architecture is proposed as a platform to implement this kind of smart contract, because it offers many benefits like more frictionless user experience, economical use of transaction fees and more.
Link to the full paper: https://drive.google.com/file/d/1cmdTAWSyPR5aTHC6b5XyOjG-0N-4Dcz6/view
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