SDRC - Chapter 1 – Pre-Word - Securing Digital Rights for Communities (Game Theory and Governance of Scalable Blockc

----------------------- # **The Digital Community Manifesto (Digital Rights, Game Theory and Governance of Scalable Blockchains for Use in Network States)** ----------------------- # Chapter 1 – Pre-Word --- *The legacy economic system only responds to legitimate parallel competition that treats people better.* ## **Introduction** This book (and accompanying audiobook) forms a go-to reference for understanding and achieving true decentralisation in social community blockchains and digital Network States. We believe in a model with: - **No Pre-Mines** *(For further information see Annex I – Glossary of Terms and Acronyms)* - **No ICO's (Initial Coin Offerings** – *for further information see Annex I – Glossary of Terms and Acronyms*) - **No Companies or CEOs** - **No Early Venture Capital** Instead, the community should guide the technology and governance, maintaining the neutrality of the base layer for itself, ensuring freedom and participation for everyone. We will explore the game theory of network attacks, attack vectors, how to defend against attacks, guiding principles for decentralisation, a realistic vision for the future, and the best technical stacks for censorship resistance and governance. You will find an in-depth discussion of: - **Reputation and Governance Mechanisms** - **Tokenomics and Immutable Communities** - **DAO's and New Funding Models** - **Future Implications of This Technology** Throughout, we emphasize how these decentralised approaches may reshape society. We plan to illustrate our concepts with real-world examples of communities that have implemented them. This is a fully open-source, community-driven work, freely available to anyone who wants to replicate or expand upon these principles. --- ## **Why Document This Now?** The community forming what has become the back bone of the Hive Blockchain has endured years of conflict, evolution, and successful defence against multiple takeover attempts yet it remains decentralised. The ability to remain decentralised over almost a decade at the time of publishing, means there is noteworthy knowledge to be gained and lessons to be learned from dissecting how Hive’s community achieved this resilience. In doing this, we reveal the critical requirements and pass on an industry standard for any other community network and Network State hoping to: - **Stand the greatest chance of true decentralisation** - **Remain censorship-resistant** - **Thrive economically and socially** Our ultimate aim is to document the “how and why” of proper and principled decentralisation, including the deeper implications for human freedom. In a world often controlled by entrenched power structures hostile to genuine decentralised, and therefore neutral systems, this knowledge is recorded immutably, and preserved under the account @networkstate on the Hive Blockchain one of the most principled, battle hardened and proven communities in decentralisation. The next 25 chapters (you are reading Chapter 1) are the product of **20+ months of filming, writing, systematic break down of underlying principles and technology and continuous reflection**. Each topic builds on the last, culminating in a holistic framework for decentralised governance and secure digital communities. For those of you interested in understanding more about how this book was created, go to https://hive.blog/@networkstate to see the discussions and conversations that went into the creation of this work, as well as see the immutable text version, stored on the blockchain, so that the ideas, essential for digital freedom within cannot be erased from our consciousnesses. This is a new field of human understanding and so we invite your input. Constructive dialogue helps refine these ideas and is essential to the understanding of the principles required for this burgeoning field which is essential to the maintenance of digital freedom and digital rights into the future. It is long overdue that we share these methods in a digestible, publicly documented way, so others may replicate them and maximize their own decentralisation and digital self-sovreignty. --- ## **Scope and Purpose** Decentralisation, at present, is a term widely misunderstood in the crypto industry. Many projects, including Ethereum and most other leading, reputed crypto projects are not actually fully decentralised. Launched with conflicts of interest from ICO's, founder stakes, and pre-mines, amongst many other conflicts, such mechanisms often embed weaknesses that undermine genuine decentralisation in the long run. We will contrast such pitfalls with a more robust formula for censorship-resistant design. In particular, we show how projects can thrive without centralised corporate structures or seed round investors. By removing these single points of failure, communities can achieve: - **Self-Sovereign Token Economies** - **Immutable Social Layers** - **User-Owned Governance and Reputation Systems** This work aims to become both an industry and societal standard on decentralisation for social and Network State type communities. By explaining the precise steps and technologies, we hope everyone can more easily understand and if they choose, build their own censorship-resistant networks, taking many of the foundational, timeless lessons explored in the following paragraphs about true decentralisation and what is required to achieve, maintain, attack, defend, apply, and expand it. ## **“You Must Know Your Worth Before You Can Be Worth Anything”** The Hive community has a history of being one of the only blockchain communities which successfully defended itself against centralised takeovers, removed exploitative stake, and fortified governance, and so sets a vital precedent which can be studied and replicated. These successes and the underlying lessons can serve the entire world as it searches for more equitable, secure ways to operate. We believe there is a specific method for achieving and sustaining decentralisation, an approach offering genuine freedom and a more enlightened path on Earth. In a world where established power structures often oppose truly decentralised systems, it is crucial to document, debate, and preserve the knowledge gleaned from this text storage based blockchain community. --- ## **Make a Value4Value Donation to Support this work:** If you found the information in this work valuable, please do consider returning some of your value back to the authors way with some Value4Value. **Value4Value** is a monetisation model, a content format, and a way of life. It is about freedom and openness, connection and free speech, sound money and censorship resistance. **Time** - Your time & attention are valuable. Spending them is valuable in and of itself. **Talent** - It doesn't have to be money. Whatever your skills, there are many ways to give back. **Treasure** - Thanks to the Bitcoin Lightning Network, Hive Backed Dollars, and other forms of monetary transfer, value can now be exchanged permissionlessly, instantly without friction and completely outside of the legacy economy. ### Donate **Lightning** to: networkstate@sats.v4v.app ### Donate fee-less **HBD** (Hive Backed Dollars) to: @networkstate --- ## **Contributors:** - **Voice for Audio book** - @alohaed - **Cover Graphics** - @rubencress - **Content assistance** - @eddiespino - **Technical Input** – Thanks to various Hive Blockchain community members over the years for teaching us this stuff. And in particular: @alex-rourke, @blocktrades, @brianoflondon, @meno, @rubencress, @ura-soul, @vaultec for their reviews of this book and for spotting our mistakes! --- *We invite anyone to challenge the ideas in this book at the official blog spot https://ecency.com/@networkstate We will incorporate your ideas in future editions and mention your username in this contributors part* --- ## **Our hope is that this book:** - **Clarifies what real decentralisation means.** - **Shows how to maintain it practically.** - **Establishes a replicable model for future projects.** - **Assists the reader to participate in discussions about whether or not a project is actually decentralised.** No single person or company can define “freedom” in a decentralised ecosystem it must emerge from the community itself. These chapters will detail our experiences, analyses, and guidelines to ensure your community can thrive, defend itself, and stay decentralised for generations to come. **In freedom, and in defence of it, let us begin.** @starkerz, @theycallmedan – May 2025 --- ## **Table of Contents** --- ### **1. Pre-Word (This Chapter)** --- ### **2. Vision and Implications of Decentralisation for Network States** --- #### 2.1 What is a Network State? #### 2.2 Voluntary Migration to an Alternative, Parallel Economy 2.2.1 Why An Alternative, Parallel Economy? 2.2.2 New Options for Opting Out of Oppressive Economies #### 2.3 Communities Achieving Sovereignty 2.3.1 The Historical, Town Square Context 2.3.2 Building Digital Sovereignty #### 2.4 Creating One’s Own Sovereign Economy 2.4.1 Why Sovereign Economies? 2.4.2 Mechanics of a Community Economy #### 2.5 From Online Community to Recognized Network State 2.5.1 Path to Recognition 2.5.2 Governments Joining New Parallel Economies --- ### **3. The Underlying Principles** --- #### 3.1 Why True Decentralisation Is Difficult 3.1.1 Profit vs. Principles 3.1.2 Censorship Resistance is Binary 3.1.3 Counter-intuitive Choices 3.1.4 Freak Events and Serendipity #### 3.2 Everyone Did It Wrong Except a Few 3.2.1 What Bitcoin Got Right 3.2.2 What Most Proof-of-Stake Chains Got Wrong 3.2.3 Steem and the Emergence of Hive 3.2.4 Why Hive Is a “Freak Event” #### 3.3 Petri Dish Cultivation Model 3.3.1 The Need for Organic Growth 3.3.2 Value-for-Value Incentives 3.3.3 Voluntary Participation 3.3.4 Hard-to-Replicate Events #### 3.4 Universal Digital Human Rights (UDHR) 3.4.1 Digital Self-Sovereignty 3.4.2 Immutable Speech and Transactions 3.4.3 Beyond the Reach of a Single Country #### 3.5 Key Lessons of the Required Principles 3.5.1 No Single Control Point 3.5.2 Parametrised Consensus 3.5.3 Distribute Tokens Broadly 3.5.4 Freak Events Often Trigger Real Decentralisation 3.5.5 Censorship Resistance as a Social Phenomenon --- ### **4. What a Social Blockchain’s Layer 1 Should Do** --- #### 4.1. Data Availability (Text-Based Data Only) #### 4.2. State Recall and Historical Record #### 4.3. Table of Truth and Custom JSON #### 4.4. Accounts and Resource Management #### 4.5. On-Chain Actions: Posting Content and Commenting #### 4.6. Communities and Followers list #### 4.7. Governance Voting (Further Details in Later Chapters) #### 4.8. Infrastructure Incentivisation (Micro-Payments for Node Operators) #### 4.9. Transactions / Transfers #### 4.10 Balancing Block Production with Efficiency in Voting and Operation 4.10.1 Block Producer Rotation and Back-Ups #### 4.11 Why Keep Layer 1 Minimalist? --- ### **5. Zero Fee Structure** --- #### 5.1. Spam limitation & Resource Credit Systems 5.1.1 Requiring Users (or Apps) to Stake 5.1.2 Eliminates Per-Transaction Fees 5.1.3 Deters Spam 5.1.4 Fosters App-Level Staking #### 5.2. Incentivizing Community-Run Nodes & Infrastructure 5.2.1 Paying Infrastructure Operators from the Protocol 5.2.2 Reputation & Community Voting 5.2.3 Freedom to be Anonymous #### 5.3. Why High-Fee Layers are Bad for Communities 5.3.1 High fees cause: #### 5.4. Why a Low-Fee or Fee-less Layer 1 is Preferred 5.4.1 Universal Access 5.4.2 Circular Economies 5.4.3 Strong HODL Incentives for Decentralised Applications 5.4.4 Equitable Distribution for Everyday Users --- ### **6. What a Social Blockchain’s Layer 2 Should Do** --- #### 6.1. Application Operations and Services 6.1.1 Offloading Heavier Logic 6.1.2 Front-End Interactions 6.1.3 Data Efficiency #### 6.2. Rely on the Security and Account System of Layer 1 6.2.1 Leverages Layer 1 Accounts 6.2.2 Anchors Critical State 6.2.3 Avoids Duplicating Security on Layer 2 #### 6.3. If Done Correctly, Layer 2 Does Not Need Layer 1 Security 6.3.1 Minimal On-Chain Dependencies 6.3.2 Reduced Attack Surface 6.3.3 Separate Upgrades #### 6.4. Smart Contracts / Heavy Data (Non-Text) & Computation 6.4.1 Smart Contracts 6.4.2 Heavy Media / Non-Text Storage 6.4.3 Computationally Intensive Operations #### 6.5. Tokens, Wrapping, and Decentralised Finance (DeFi) 6.5.1 Custom Tokens 6.5.2 Instant, Low Cost Swaps and Wrapping 6.5.3 Fee-less DeFi #### 6.6. Implications: Efficiency, Scale, and User Experience 6.6.1 Lower Fees 6.6.2 Fast, Rich Apps 6.6.3 Protection of the Base Chain #### 6.7. BLS Multi-Sigs on Layer 1 and Escrow & liquidity Pools on Layer 2 6.7.1 BLS & Escrows 6.7.2 Layer 2 liquidity Pools --- ### **7. Sustainable Economy & Decentralised Coin Distribution** --- #### 7.1. Token Distribution Methods #### 7.2. Incentivized Stakeholder Distribution (ISHD / Proof of Brain) #### 7.3. Making Spam Costly and Creating Competition for Resources; Increasing Buy Pressure with Increasing Network Affect #### 7.4. Social Distribution as a Trojan Horse #### 7.5. Distribution to Multiple Parties & Ongoing Issuance 7.5.1 Multiple Mechanisms of Distribution to: 7.5.2 Continuous, Controlled New Token Minting: #### 7.6. The Importance of Earning Your Tokens #### 7.7. Keeping Inflation in Check #### 7.8. What You Want to See vs. What You Don’t #### 7.9. No Compromise on Free Speech & Censorship Resistance --- ### **8. Reputation** --- #### 8.1. Why Reputation Matters 8.1.1 Social Trust Over Trust in Code 8.1.2 Accountability and Skin in the Game 8.1.3 Support of Nuanced, Complex Social Interactions #### 8.2. Two Types of Reputation in Decentralised Systems 8.2.1 On-Chain, Numeric Reputation 8.2.2 Intangible Human-To-Human Reputation #### 8.3. Building Reputation 8.3.1 Consistent Value Creation 8.3.2 Stakeholder Validation 8.3.3 Social Presence and Visibility #### 8.4. Reputation-Based Trust and Account Value 8.4.1 Account Reputation as an Escrow 8.4.2 Increasing Account Valuation #### 8.5. Reputation-Based Delegation and Voting 8.5.1 Why Users Delegate 8.5.2 Scaling Influence 8.5.3 Defence Against Attacks #### 8.6. Reputation in Times of Crisis or Forking 8.6.1 Communities Rally Around Known Leaders 8.6.2 Long-Term Commitment --- ### **9. Why Free Open Source Software (FOSS) is Needed** --- #### 9.1. Ensuring Transparency and Trust #### 9.2. Long-Term Sustainability and Fork Resilience #### 9.3. Mitigating Legal and Regulatory Risks #### 9.4. Enhancing Community Innovation #### 9.5. Security Through Community Collaboration --- ### **10. Bridge to Decentralised Governance** --- #### 10.1. What Is Decentralised Governance? #### 10.2. Why You Need Governance in Decentralised Systems #### 10.3. Data Availability and Agreement #### 10.4. Forms of Consensus and Voting #### 10.5. Potential Governance Models #### 10.6. Governance and the Human Element --- ### **11. De-Governance** --- #### 11.1. Governance Is Unavoidable #### 11.2. Proof-of-Work (PoW) 11.2.1 Mitigations for Proof of Work Attacks 11.2.2 Longer Term Accumulation Attacks on a PoW Chain 11.2.3 Why We Call PoW "Infrastructure Voting" #### 11.3. Proof-of-Stake (PoS) 11.3.1 Otherwise Known as Un-Parametrised Coin Voting 11.3.2 The Fundamental Idea 11.3.3 Why Un-Parametrised Coin Voting (PoS) Tends to centralise 11.3.4 Mitigations for PoS Attacks 11.3.5 Danger of Centralisation 11.3.6 The Necessity of Guardrails 11.3.7 Why We Call This "Un-Parametrised Coin Voting (UPCV)" #### 11.4. Delegated Proof-of-Stake (DPoS) or Parametrised Coin Voting (PCV) 11.4.1 Community Reputation and Named Accounts 11.4.2 Advantages Over Basic PoS 11.4.3 Disadvantages of DPoS #### 11.5. The Importance of Parametrisation #### 11.6. Why No Founders, No ICO, and No VC's #### 11.7. Voting Models Are Everywhere #### 11.8. Accountability and Preventing AI/Big Tech Takeover #### 11.9. Defining Web2.5 #### 11.10. Achieving True Web 3 #### 11.11 Putting It All Together --- ### **12. Coin Voting Parameters** --- #### 12.1. Importance of Long Lock-Ups for Governance Participation #### 12.2. One-Month Voting Delay #### 12.3. Why a Three-Month Lock-Up? #### 12.4. Stablecoin Security #### 12.5. Haircut Rules #### 12.6. Time Delay on Bulk Token Swaps #### 12.7. Inflation Control #### 12.8. Importance of Transaction Taxes #### 12.9. Backing the Token with Community Interactions #### 12.10. Rewards for Holding and Locking In #### 12.11. DApps and Services as Holders of Last Resort #### 12.12. Anonymous Accounts vs. Known Accounts #### 12.13. Importance of Locally Run Desktop Apps for Censorship Resistance --- ### **13. Defending Decentralised DPoS Communities—Attack Vectors, Security Mechanisms, and the Power of Layer Zero** --- #### 13.1. Understanding the Direct 51% Attack 13.1.1 Calculating the Threshold in Practice 13.1.2 Over-the-Counter (OTC) Acquisitions #### 13.2. Indirect or Slow Accumulation Attacks #### 13.3. Distribution as Security #### 13.4. How to Defend Against Attacks 13.4.1 The Immune Response 13.4.2 Forking: The Ultimate Escape Hatch #### 13.5. You Can’t Buy a Community #### 13.6. The Community Is the Layer Zero #### 13.7. Reputation Building and Trust 13.7.1 The Value of On-Chain Reputation 13.7.2 Reputation Damage 13.7.3 NFTs for Reputation #### 13.8. Infrastructure Operation and Security #### 13.9. Achieving Circular Economies #### 13.10. “You Can’t Attack a System That’s Helping People” 13.10.1 Benevolent Acts and Resilience #### 13.11. Bringing Governments into the Ecosystem --- ### **14. Balancing Scalability & Censorship Resistance** --- #### 14.1. Why the “Scalability Trilemma” Is Misleading 14.1.1 Security and Decentralisation Are the Same Goal 14.1.2 Mixing Computation With Data Availability #### 14.2. Rethinking Scalability 14.2.1 lightweight Base Layer for True Layer-2’s 14.2.2 Resource Credits vs. Fee Auctions #### 14.3. Censorship Resistance = Security 14.3.1 Un-Parametrised Proof of Stake vs. Parametrised Coin Voting #### 14.4. Governance and Stake Distribution: The Most Difficult and Most Crucial Element #### 14.5 Zero Knowledge Roll-ups for Scaling and Privacy #### 14.6. Real-World Example: Community Forks --- ### **15. Censorship & Morality of Pre-Mines** --- #### 15.1. Understanding the Moral and Practical Issues of a Pre-Mine 15.1.1 Defining a Pre-Mine 15.1.2 Hidden “Regulation Through Pressure” #### 15.2. How Pre-Mines Undermine Censorship Resistance 15.2.1 Coin Voting Without Parameters 15.2.2 Tying into centralised Nodes #### 15.3. Moral Arguments Against Pre-Mines #### 15.4. Censorship Implications of centralised Coins #### 15.5. Case Studies & Real-World Consequences #### 15.6. How a Pre-Mine Hurts Everyday Users #### 15.7. Moving Forward Without Pre-Mines --- ### **16. Three Pillars of Decentralisation** --- #### 16.1. Text-Based Data Availability #### 16.2. Zero-Fee Transaction Layer #### 16.3. On-Chain Stablecoin #### 16.4 Why These Three Pillars Matter --- ### **17. Algorithmic Stable coins on Layer 1** --- #### 17.1 Why We Need a Truly Decentralised Stablecoin #### 17.2 Backing the Stablecoin with Digital Real Estate (Social Tokens and Bandwidth in the Ecosystem) #### 17.3 How It Works #### 17.4 Infinite liquidity Through Base-Token Conversion #### 17.5 Example: Hive Backed Dollars (HBD) #### 17.6 Resilience Against Attack #### 17.7 Toward a Parallel Dollar Economy --- ### **18. Off-Chain Data Availability Layer** --- #### 18.1 Why Not Just Put It All On-Chain? #### 18.2 How Off-Chain Incentives Work #### 18.3 Example: The SPK Network #### 18.4 Keeping the Base Layer lightweight #### 18.5 Why Separate Layers Matter --- ### **19. Service Infrastructure Pools (SIP)** --- #### 19.1 Basic Concept – Send Exchange Fees Back to the Community #### 19.2 Example from SPK Network #### 19.3 Combining a DEX and a DAO #### 19.4 Required Technology and Combining Ecosystem liquidity #### 19.5 Self-Sustaining Ecosystem #### 19.6 Replacing centralised Exchanges --- ### **20. Open Source Renders IP Valueless** --- #### 20.1 Why Traditional IP Models Will Weaken 20.1.1 Copy and Iterate 20.1.2 No centralised Enforcement #### 20.2 Accumulating the Base Token Instead of IP 20.2.1 Governance Rights Accumulation as the Business Model 20.2.2 Community Ownership #### 20.3 Abundance vs. Scarcity of IP 20.3.1 Abundant Code 20.3.2 Power of The Network Effect #### 20.4 Brand and Community Tensions 20.4.1 Forking Logos and Names 20.4.2 Brands Aligning with Their Community 20.4.3 Stake for Resources 20.4.4 Intrinsic Utility #### 20.5 Suing a Distributed Community 20.5.1 Impossible Central Target 20.5.2 Undermining IP Laws --- ### **21. Importance of Decentralised, Immutable Communities as Network States** --- #### 21.1 Defining Network States #### 21.2 Power of Sovereign Communities #### 21.3 Decentralised Token Distribution on Layer 2 #### 21.4 Sustainable Token Value and Staking Incentives #### 21.5 Liquidity Pools for Each Community #### 21.6 Community Self-Regulation of Content and Rewards #### 21.7 Content Gateways and Validators #### 21.8 Stake-Weighted Tagging #### 21.9 Reward Disputes --- ### **22. DAO's & Community Proposals for Self-Funding** --- #### 22.1 Decentralised and Neutral Funding #### 22.2 What Is a DAO? #### 22.3 Decentralised vs. VC-Backed DAO's #### 22.4 Returning Value to DAO's #### 22.5 Example: The Hive Blockchain Decentralised Hive Fund (DAO) and SPK Network #### 22.6 Alternatives to "No Strings Attached" Funding #### 22.7 Why Neutral DAO Funding Matters #### 22.8 DAO’s are Always More Centralised than the Witness Pool --- ### **23. A New Model for Startup Funding** --- #### 23.1 DAO, Miner Tokens, and Fixed-Governance Supply #### 23.2 liquidity and Value Through Miner Tokens #### 23.3 Starting a Decentralised Project #### 23.4 Key Advantages #### 23.5 Example: SPK Network on the Hive Blockchain #### 23.6 Best Practices and Takeaways --- ### **24. Future Implications** --- #### 24.1 Social Media Account Not Owned by Silicon Valley Companies, Digital Self-Sovereignty and Guaranteed Free Speech #### 24.2 No Longer Possible to Manipulate History #### 24.3 Impossible to Shut Down #### 24.4 Money Attacks Can Strengthen Communities #### 24.5 Holding Abusive Oligarchs to Account #### 24.6 Network State Communities and Governments #### 24.7 Rebalancing of Power #### 24.8 Fee-less DeFi #### 24.9 Competition with Traditional Models --- ### **25. Examples of Self-Funded Communities** --- #### 25.1 Increased Security #### 25.2 Ghana Borehole Projects #### 25.3 Ghana Health Checks #### 25.4 Venezuela: Street Acrobatics and Infrastructure #### 25.5 Cuba and Mexico: Paying Utility Bills with Content Rewards #### 25.6 Why It Matters --- ### **Annex I** --- - Glossary of Terms and Acronyms ---

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