vitalik.eth: onchain mechanism design needs two layers

vitalik.eth@vitalik.eth

I actually don't think it's complicated. IMO the future of onchain mechanism design is mostly going to fit into one pattern: [something that looks like a prediction market] -> [something that looks like a capture-resistant, non-financialized preference-setting gadget] In other words: * One layer that is maximally open and maximizes accountability (it's a market, anyone can buy and sell, if you make good decisions you win money if you make bad decisions you lose money) * One layer that is decentralized and pluralistic, and that maximizes space for intrinsic motivation. This cannot be token-based, because token owners are not pluralistic, and anyone can buy in and get 51% of them. Votes here should be anonymous, ideally MACI'd to reduce risk of collusion. The prediction market is the correct way to do a "decentralized executive", because the most logical primitive for "accountability" in a permissionless concept is exactly that. Though sometimes you will want to keep it simple, and do a centralized executive at that layer instead: [replaceable centralized executive] -> [something that looks like a capture-resistant, non-financialized preference-setting gadget] Thinking in these two layers explicitly: (i) what is doing your execution, (ii) what is doing your preference-setting and is judging the executor(s), is best. https://firefly.social/post/x/2018205196…

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by mishaderidder.eth13093 🥝 • 8mo • farcaster.xyz
AI summary of the linked article

Vitalik Buterin argues that onchain mechanism design is mostly going to follow a two-layer pattern: a prediction-market-style execution layer and a separate preference-setting layer. He says the market layer is open and accountable, since anyone can trade and good or bad decisions earn or lose money. The preference-setting layer should be decentralized and pluralistic, and he argues it cannot be token-based because token owners are not pluralistic and anyone can buy 51% of them, so votes there should be anonymous, ideally MACI'd to reduce collusion risk. He also says a replaceable centralized executive can be used at the execution layer when simplicity is wanted.

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Again prediction markets, but you have to be interested to engage w/ prediction markets in the first place. Personally I think they can sometimes be fun to look at, but I have never felt the urge to engage and bet myself. But maybe this is just not meant for me :)
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During breakfast I was still thinking about this. What if you would understand and built prediction markets not as betting perse but as a kind of voting. So it would not be a financial market so much, but more of a market of signals of preferences, like a more organic way of democracy. Much like you find democratic systems in nature w/ for example bees or ants. It would be interesting to built experiment at least.

Personally I think financial speculation as incentive would not interest me, but it could be a very interesting way to come to group decisions. (Especially for very large distributed groups.)
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