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**Securing Digital Rights for Communities (Game Theory and Governance of Scalable Blockchains for Use in Digital Network States)**
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# Chapter 3 – The Underlying Principles

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*When it comes to digital freedom, it is principles that matter most, economy is always a counter-intuitive 2nd*

## **Introduction**
Most blockchains claim to be decentralised, yet many have fallen short of delivering actual censorship resistance or meaningful digital rights. In this chapter, we explore the fundamental principles that support genuine decentralisation, why it is so hard to achieve, and how certain historical “freak events” accidentally resulted in the correct structural design. We also introduce the concept of the **Petri dish cultivation model**, where an ecosystem evolves organically rather than being “designed” from the top down.

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## 3.1 Why True Decentralisation Is Difficult

### 3.1.1 Profit vs. Principles

Most project leaders focus on profit and convenience. They raise venture capital, pre ordain themselves tokens from the first day of the project in the form of large pre-mines or ICO's, or form legal entities. While these strategies may somewhat help to fund development, they inevitably compromise on decentralisation. Regulators can easily target corporations, foundations, or high-profile founders. For more detail on Pre-Mines and ICO’s, see Chapter 15. “Censorship and the Morality of Pre-Mines”

### 3.1.2 Censorship Resistance is Binary

Either your system can be controlled by external parties, or it cannot. If a chain has a headquarters, a known CEO, or a large pre-mined stake in the hands of a few insiders with self-ordained pre-mines or ICO stakes, there are clear points of failure. True censorship resistance requires that no single entity or small colluding group can seize control.

### 3.1.3 Counter-intuitive Choices

Many of the decisions that yield true decentralisation look bad on paper. For example, not raising money or not giving a founder a large token allocation seems “unprofitable.” Yet these moves are necessary to avoid creating central points of attack. At almost every juncture, founders who are profit-driven do so at the cost of decentralisation and so undermine censorship resistance. The key is in striking the balance to adequate decentralisation for the application in question. When dealing with digital rights, and maintaining neutral, decentralised layers this means putting counter-intuitive decision choices ahead of profit.

### 3.1.4 Freak Events and Serendipity

History shows that blockchains achieving genuine decentralisation rarely follow a neat, logical plan. Often, the original builders did not fully grasp what they had created. In retrospect, the intuitive “right” features that are typically chosen such as certain lock-up periods for founders or adding a centralised treasury turned out to be weak points in future which compromised the neutrality and decentralisation of the community. Repeating a sequence of events that are counter intuitive and principled enough in order to ensure decentralisation and digital rights is extremely difficult to deterministically plan for and orchestrate deliberately.

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## 3.2 Everyone Did It Wrong Except a Few

### 3.2.1 What Bitcoin Got Right

Bitcoin avoided pre-mines, ICO's, and corporate sponsors. Satoshi Nakamoto disappeared, leaving no formal leadership. While Bitcoin’s proof-of-work is excellent for store of value and permissionless access to liquidity, and a permissionless transaction layer for those that can afford fees. Its high fees and limited throughput make it ill-suited for scalable social or governance ecosystems.

### 3.2.2 What Most Proof-of-Stake Chains Got Wrong

Many proof-of-stake projects launched with large ICO's, venture backing, or corporate structures. They also adopted high fees and Layer-1 smart contracts (for further information on Smart Contracts see Annex I – Glossary of Terms and Acronyms), creating a “rich-get-richer” environment where governance is dominated by 2 or 3 naturally occurring large staking pools. Over time, these chains tend toward de facto centralisation: a few pools or validators control the system, and regulators can target them. This model is useful however for earning yield where social nuance is not an issue and many DeFi (Decentralised Finance) applications benefit from a financial passive earning system where the one with the largest stake has the most to lose from unfair treatment of users. (For further information on “DeFi” and “Staking” see Annex I – Glossary of Terms and Acronyms)

### 3.2.3 Steem and the Emergence of Hive

The Steem Blockchain (later forked into The Hive Blockchain) provides a rare illustration. Steem originally had a “ninja-mined” founder stake controlled by the company Steemit Inc. Unexpectedly, that stake was sold to a high-profile buyer, Justin Sun, founder of the Tron blockchain, sparking a hostile takeover attempt. The community through its DPoS (Delegated Proof-of-Stake – for further information see Annex I – Glossary of Terms and Acronyms) mechanism managed to fork away and create Hive, zeroing out the founder’s stake. This forced event removed the largest point of centralisation and left the chain truly community-owned and operated

(See Chapter 11.4 De-Governance for further information on DPoS, See chapter 13.4.2 for more information on forking away from an abusive whale stake).

### 3.2.4 Why The Hive Blockchain Is a “Freak Event”

- **Founder Exit:** The principal developer left early, taking minimal continuous control.
- **Hostile Takeover:** The attempt to seize the chain triggered the community to unify and fork out the hostile stake.
- **No ICO, No VC, No Foundation:** Without a formal entity or large pre-mine, Hive has no single point of regulatory or financial capture.
- **Community-Focused Mechanics:** A 13-week power-down (for further information see Annex I – Glossary of Terms and Acronyms) of stake locked for governance dis-incentivises large custodial accounts from staking user deposits, making exchange-led takeovers far more difficult. This prevents exchanges from using custodial stake to vote against the interests of users who have deposited with the exchanges for purposes of trading.
Additionally a new, investor has to wait for 30 days in order to carry out governance votes after having staked their tokens to vote. In cases where the stake is large enough to affect the governance of the chain directly, the 30 days gives the community time to find out whether or not the new investor is a benevolent force and will act in the interests of the community before they are able to carry out malicious votes. This also gives the community time to act and take defensive measures where it cannot establish a benevolent intent from the new investor.

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## 3.3 Petri Dish Cultivation Model

### 3.3.1 The Need for Organic Growth

A Petri dish offers nutrients and the right environment, but you cannot force which organisms thrive. Similarly, a censorship-resistant chain must set the right “parameters” (like consensus rules, lock-up times, and governance models) so that a truly decentralised community can take root and expand.

### 3.3.2 Value-for-Value Incentives

When participants receive rewards for providing meaningful contributions whether running infrastructure or creating valuable content they build reputations and earn tokens without needing technical credentials or large initial investments. Users with stake earn when they vote on content, these votes direct tokens from a daily communal rewards pool to the content that is voted for. Over time, this democratizes token distribution and reinforces a healthy “middle class” of stakeholders.

### 3.3.3 Voluntary Participation

No chain can coerce people to stay. Individuals stay with the community if they see real benefits, like guaranteed speech, secure transactions, fairness, and sustainable token economics. Chains with poor governance, oppressive or extractive structures drive away genuine participants, lose credibility, and remain small or centralised.

### 3.3.4 Hard-to-Replicate Events

Forking away from a centralised founder stake or orchestrating a widespread volunteer development effort is extremely difficult and risky. Forks represent delicate moments in the history of a chain where communities can easily fracture due to idealogical disagreements and misalignments. Most new chains attempt to “engineer” a community through funding rounds or marketing. Whereas genuinely decentralised ecosystems often emerge from unexpected crises that unify participants around a single set of core principles.

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### 3.4 Universal Digital Human Rights (UDHR)

### 3.4.1 Digital Self-Sovereignty

True decentralisation grants individuals irrevocable rights to their accounts, data, and tokens. If a chain’s foundation or CEO can be pressured by authorities, it cannot guarantee those rights. Neutral, leaderless systems are what enable globally uniform digital rights.

### 3.4.2 Immutable Speech and Transactions

A robust DPoS or similarly parameterised consensus ensures no small group can censor or freeze accounts. By having a predictable, transparent on-chain governance, users know that no arbitrary decision from a corporate board or government office will invalidate their actions.

### 3.4.3 Beyond the Reach of a Single Country

When a chain is fully decentralised no headquarters, no corporate registration, no founder stake jurisdictional bans fail to shut it down globally. Any country that outlaws it simply loses the talent and economic benefits migrating to friendlier jurisdictions.

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## 3.5 Key Lessons of the Required Principles

### 3.5.1 No Single Control Point

- Avoid pre-mines, ICO's, or founder stakes.
- Do not rely on a CEO or legal entity for development.

### 3.5.2 Parameterised Consensus
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- An example of a parameterised consensus is Delegated Proof-of-Stake (DPoS) with a fixed number of elected validators can offer high throughput and strong security, ideal for social interactions and governance of community social nuance, if carefully designed, since the top validators can be elected and unelected by the community itself.
- Long un-staking periods for staked tokens for governance (e.g., 13 weeks), discourage exchanges from powering up custodial user tokens and using them to vote against the interests of the users themselves.

### 3.5.3 Distribute Tokens Broadly

- Encourage and distributing freshly mined tokens to non-technical users through rewarding positive, provable social actions or “value-for-value” rewards.
- A wide distribution prevents a few insiders from hoarding the majority of supply, leading to a more easily regulatable or corruptible system.

### 3.5.4 Freak Events Often Trigger Real Decentralisation

- True censorship resistance has historically emerged from crises: founder exit, hostile takeover, or unexpected forks.
- Trying to design a perfect system up front often fails because profit motives have been shown to override long-term security.

### 3.5.5 Censorship Resistance as a Social Phenomenon

- Technology alone is insufficient. A dedicated community that believes in censorship resistance and has the tools and social impetus to enact it is crucial.
- Reputation-based engagement and transparent on-chain governance foster collective responsibility.

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## Conclusion

Arriving at genuine decentralisation is counter-intuitive and rarely driven by immediate profit. Most chains chose easy funding routes pre-mines, ICO's, large outside investments and now face takeover risks or regulatory capture. History shows that robust digital rights grow from systems that lack a single controlling entity and operate on a truly neutral base layer, forcing communities to self-govern.

The **Petri dish** metaphor captures this perfectly. You can provide the right conditions no corporate ownership, fair token distribution, parameterised governance but you cannot fabricate real decentralisation just by declaring it. It requires a community voluntarily standing behind censorship resistance and self-sovereignty, with the right digital tools, often galvanized by crises or unexpected forks.

In the chapters ahead, we will detail how to maintain these principles technically and in practice, examining the deeper mechanics of consensus design, token distribution, and ongoing governance models that reinforce genuine network autonomy. Only by embedding
these ideas deeply into the chain’s structure can we realize universal digital human rights that no centralised force can override.