Recently, due to the improvement of the market, there have been many token airdrop activities. However, complaints about unfair token distribution by certain teams are frequently heard. It is time to review Vitalik’s proposed solution four years ago – Credible Neutrality, which complements the shortcomings of blockchain technology and brings more “fairness” to the ecosystem.
Table of Contents
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Developers vs. Miners: Who is Questioned for Contributions?
Introduction to Credible Neutrality
What is Credible Neutrality?
Neutrality is Relative
Trustworthiness Ensures System Sustainability
Verifying Miners vs. Verifying Project Developers
How to Build a Credible Neutrality Mechanism
Do Not Incorporate Specific Individuals or Groups into the Mechanism
Open Source and Publicly Verifiable Execution Results
Simplify the System
Avoid Frequent Changes to the Mechanism
Bringing Fairness to the Blockchain World
Imagine a scenario where a project announces an airdrop reward, often giving a portion of tokens to core contributors. Although it is reasonable to reward developers, people sometimes feel that it is unfair, especially when these core contributors receive a larger share of tokens.
Because it is unclear how to measure the so-called “contribution” and there is no evaluation mechanism in place, incidents of perceived unfairness among other participants (usually regular users) are common.
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(Renzo’s token controversy indirectly leads to ezETH’s detachment)
Most reward programs, including the Ethereum Foundation’s bonuses, Celestia, and Avail airdrops, allocate token shares to contributing developers. Although project teams emphasize transparency and decentralization in the evaluation process, they are still subject to doubts and suspicions from other stakeholders about whether the process is biased and truly fair.
In a way, miners also receive token rewards based on the size of their contributions, distributed according to the provided computational power and time. However, no one questions whether miners’ earnings are reasonable. Why is that?
Even though both groups contribute and the processes are decentralized, why do people not question the rewards received by miners but doubt the token rewards received by on-chain developers?
The problem lies in the lack of “credible neutrality” in the mechanism that rewards developers. The concept of credible neutrality was proposed by Vitalik in 2020. Vitalik believes that:
If the design of the observation mechanism alone can easily show that the mechanism does not discriminate against or oppose any specific individuals, then the mechanism possesses credible neutrality.
A mechanism with credible neutrality treats everyone fairly, to the extent that it operates without relying on specific individuals as inputs, for example:
“Anyone who mines a block will receive 2 ETH” is an example of credible neutrality, while a team saying “Bob will receive 1000 tokens because he wrote a lot of code” lacks credible neutrality.
“A mechanism that does not display any posts marked as bad by five people” is a neutral mechanism, while a mechanism that displays any posts biased against blue-eyed people is not credible neutrality.
The government’s 20-year patent protection mechanism for “any invention” is credible neutrality, while allocating 1 billion dollars for cancer treatment is not credible neutrality.
A mechanism that does not favor specific individuals or groups can be called neutral, and if it is easy to observe whether the mechanism is neutral, then it is credible.
Neutrality refers to not favoring any party and not expressing any attitude or behavior towards any party. However, like the concept of decentralization, neutrality is not black or white but relative.
Block rewards favor those who have special connections and access to hardware and cheap electricity, so strictly speaking, they still favor those with capital. However, compared to on-chain project token issuance, it is evident that many tokens have already been pre-allocated to specific individuals. Therefore, the degree of neutrality is higher in the former case.
This is why the private property system is so effective: not because it is a God-given right, but because it is a “relatively” neutral mechanism that rewards value creators, which can solve many problems in society (although not all problems).
Not only neutrality but also trustworthiness in design is necessary. For a mechanism to be truly a common foundation for large-scale, diverse collaboration in blockchain, political systems, and social media, it is crucial that every participant can see that the mechanism is fair and that every participant can see that others’ participation in the mechanism is fair.
This is because each participant wants to ensure that “others will not abandon the mechanism the next day.”
Returning to the initial question, this is why rewards for on-chain developers are more likely to be suspected than rewards for on-chain mining. Verifying who is a miner is relatively easier than verifying who is a project developer. The mining mechanism of blockchain is more credible and neutral compared to on-chain developer rewards.
Using this example, it illustrates that a system aimed at enabling everyone to participate needs to meet credible neutrality in order for participants to feel confident and for the system to operate sustainably. This is also a critical element in the ideal Web3 infrastructure, in addition to the decentralization, security, and efficiency of blockchain.
(A Call to Return to Cypherpunk! Vitalik’s Vision of Blockchain and Ethereum’s Ideal Social Form, Integrating Speculation and Development)
Credible neutrality cannot be achieved solely through blockchain. The system needs to meet four main rules:
Do not incorporate specific individuals or groups into the mechanism.
Open source and publicly verifiable execution results.
Simplify the system.
Avoid frequent changes to the mechanism.
Each of these rules is explained below.
This is the most important point emphasized in the above explanation: not favoring anyone or anything. In a mechanism with credible neutrality, it should not start from specific individuals or things but from the behavior of participants.
In a free market, through market mechanisms, it can be discovered that the product provided by Charlie is useless while David’s product is useful, and eventually, people will stop buying Charlie’s product, leading to Charlie’s bankruptcy, while David earns profits and can expand.
Most of the output information should come from the behavior of participants as inputs, rather than from hard-coded rules within the mechanism itself.
The rules of the mechanism should be transparent and able to be publicly verified to ensure proper execution.
Of course, in many cases, the privacy of participants should be maintained (and it should even be impossible to prove how they participate). Therefore, achieving both public verifiability and privacy can be done through zero-knowledge proofs.
The simpler the mechanism, the less space there is to insert privileges that hide privileges for the target group.
If a mechanism has 50 parameters that interact with each other in complex ways, it is easy to hide specific rules. However, if there are only one or two parameters, it becomes much more difficult, just like how cheating in rock-paper-scissors is more difficult than cheating in online games.
Changing the mechanism is a form of complexity that increases the difficulty of implementing the third rule and also resets time behind the veil of ignorance because others need to re-understand the rules of the mechanism. This provides an opportunity to reduce neutrality.
Blockchain is merely the foundation, not everything. Blockchain only guarantees decentralization and transparency of on-chain information. Therefore, even if products or protocols are built on a decentralized network, there are still many other important components required to create a more free and healthy Web3 ecosystem.
Credible neutrality is one of them. For a system to build a sustainable community foundation, it needs to ensure fairness in the mechanism. Without a mechanism with credible neutrality, this cannot be achieved.
In future token issuances or service promotions, consideration can be given to conducting them in a fairer manner, which may reduce many unnecessary controversies.
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Further Reading
Community Hopes Ethereum Returns to PoW? Vitalik: Proof of Work is Also Centralized
Vitalik: ZKasino Doesn’t Have ZK, Just a Gimmick