IOTA wants to establish a democratic decision-making process for the future in the increasingly important Shimmer (SMR) side project. Discussion on details has begun.
At IOTA, the Shimmer (SMR) side project has taken on a central role in recent months, and Shimmer is to receive an official mainnet before the end of 2022. This would enable monetary applications for Shimmer and SMR could be traded on crypto exchanges. This is one of the reasons why the IOTA community has been discussing since June how to establish a mechanism at Shimmer to decide on strategic issues in the future. The IOTA Foundation has now announced a proposal that has emerged from the discussions.
In principle, IOTA and Shimmer are following the concert of DAOs (Decentralized Autonomous Organization) here, which also exist with other cryptocurrencies. Proposals from the community, for example, are supposed to go through a multi-stage procedure before they are released for voting. This procedure seems to be largely uncontroversial. However, there are dissenting voices as to exactly which rules should apply to Shimmer referendums. The current proposal is that a simple majority of votes cast should lead to a binding result if 5 percent turnout is reached. One SMR token is equal to one vote in this regard. However, there had already been criticism of such a rule in an earlier vote on token distribution at Shimmer.
The objection is that a 50 percent majority favors whales, i.e. community members who hold large amounts of IOTA or SMR. In addition, IOTA activists such as DLTimes on Twitter criticize that narrow majorities could be sufficient for far-reaching decisions, creating little pressure to promote genuine consensus-building. He therefore suggests either raising the threshold for a majority vote to 70 percent or introducing a no vote that can be combined with a veto. If 35 percent of such no-plus-veto votes were counted, a proposal should be considered rejected, he said. Otherwise, Shimmer said, he runs the risk that “the rich minority” will call the shots.
Discussions of DAOs sometimes include tying voting rights to wallets rather than individual tokens. But such a model would predictably suffer from Whales simply spreading their holdings across multiple wallets.
Bottom line: say on shimmer holds potential conflict for IOTA.
In principle, from the perspective of investors and active community members, it is to be welcomed that IOTA is striving for democratic self-governance with Shimmer. However, the current discussions on this also show that a practical balance between fair procedures and decisions that can be made by a majority is not so easy to achieve. For Shimmer and IOTA, this will now be a test, the outcome of which is likely to be symbolic.