MIP52: Dispute Resolution

MIP52: Dispute Resolution

Preamble

MIP#: 52
Title: Dispute Resolution
Author(s): Gregory Di Prisco (g_dip)
Contributors: None
Type: General
Status: RFC
Date Proposed: 2021-05-04
Date Ratified: n/a
Dependencies: MIP3c1
Replaces: n/a

Sentence Summary

MIP52 outlines a process by which any community member or stakeholder can elevate the resolution of a dispute directly to MKR holders

Paragraph Summary

This MIP outlines a process by which any community member or stakeholder can elevate the resolution of a dispute directly to MKR holders. There will be two primary components to this MIP, one which allows for the dispute to be settled in the normal governance cycle and another that permits for an immediate resolution, and a third component which sets a parameter for the immediate resolution component.

Component Summary

MIP52c1: Standard Dispute Resolution

This component outlines a process by which a community member or stakeholder can have the MKR holders vote on a binary outcome in the ratification polls of the monthly governance cycle.

MIP52c2: Immediate Dispute Resolution

This component outlines a process by which a community member or stakeholder can cause an immediate on-chain binary option poll in the next eligible weekly governance cycle.

MIP52c3 - MI52c2 Burn Amount

A parameter set by governance which specifies the amount of MKR that must be burned to utilize MIP52c2.

Motivation

While bureaucracy and delegation of tasks is necessary to ensure the smooth operation of the DAO, all stakeholders should ultimately have recourse directly to MKR holders. As the DAO continues to add Core Units and add Mandated Actors, it is inevitable that a community member or stakeholder will disagree with a decision being made by these groups or individuals. This MIP will allow that community member or stakeholder appropriate recourse. This will also allow the MKR holders to have a process by which they can have their voices heard in any situation.

Specification / Proposal Details

MIP52c1: Standard Dispute Resolution

In the event that a community member or stakeholder disagrees with any action of the DAO, whether that action has been taken by a Core Unit, Mandated Actor, or any other person or group directly or indirectly elected by MKR holders (the “Official DAO Members”), this community member or stakeholder may use this MIP to call a vote which provides a binary outcome for MKR holders to determine. The language used by the community member or stakeholder must be structured as a yes or no question. Both parties involved must be given the opportunity to write their own language for the poll. The language in the poll itself should be limited to a number of characters set by the Governance Facilitator (and must be the same for both parties), but each party may provide a link to a forum post outlining a longer form argument. This question will then be presented to MKR holders in the ratification polls of the monthly governance cycle. The poll will resolve with a simple majority of MKR, but must meet the positive participation threshold for all Ratification polls. The outcome of the poll will be considered a binding resolution to the dispute. Any ambiguity in the outcome of a poll will be deferred to the judgement of the Governance Facilitators. Once the outcome of the dispute has been determined by MKR holders, any Official DAO Member that refuses to comply with the outcome shall be considered to be acting explicitly against the will of the MKR holders.

MIP52c2: Immediate Dispute Resolution

Since certain circumstances are time sensitive, this component provides a path to immediately resolve a dispute. Please note that this component is separate from MIP5 and is not intended to be used in emergency situations. Since an immediate resolution causes friction and overhead to the DAO and MKR holders, there should be a cost associated with utilizing this component. To deter abuse and ensure a sufficiently high bar to utilize this component, the community member must burn a predetermined amount of MKR (the “MIP52c2 Burn Amount”). In order to avoid confusion, the address from which the MKR will be burned should be posted publicly in the forums before the MKR is destroyed. The community member or stakeholder shall burn the MKR by sending it to 0x0000000000000000000000000000000000000000 after posting a MIP52c2 subproposal which includes the address that will destroy the MKR. If there remains any doubt that the community member or stakeholder is in control of the address destroying the MKR, a Governance Facilitator may demand further proof of control by requesting the address to sign a message. Once the MKR is burned, the poll will be placed in the next eligible weekly cycle.

In the event that a community member or stakeholder disagrees with any action of the DAO, whether that action has been taken by a Core Unit, Mandated Actor, or any other person or group directly or indirectly elected by MKR holders (the “Official DAO Members”), this community member or stakeholder may use this MIP to call a vote which provides a binary outcome for MKR holders to determine. The language used by the community member or stakeholder must be structured as a yes or no question. Both parties involved must be given the opportunity to write their own language for the poll. The language in the poll itself should be limited to a number of characters set by the Governance Facilitator (and must be the same for both parties), but each party may provide a link to a forum post outlining a longer form argument. This question will then be presented to MKR holders in the ratification polls of the monthly governance cycle. The poll will resolve with a simple majority of MKR, but must meet the positive participation threshold for all Ratification Polls. The outcome of the poll will be considered a binding resolution to the dispute. Any ambiguity in the outcome of a poll will be deferred to the judgement of the Governance Facilitators. Upon completion of the poll, the Governance Facilitators shall determine whether to return the burned MKR to the user of the MIP and, if choosing to do so, may include the transfer in the next eligible monthly governance cycle. Once the outcome of the dispute has been determined by MKR holders, any Official DAO Member that refuses to comply with the outcome shall be considered to be acting explicitly against the will of the MKR holders. MIP52c2 will override any calendar exceptions outlined in MIP3c4.

MIP52c3: MIP52c2 Burn Amount

This component specifies the amount of MKR that a community member or stakeholder must burn in order to utilize MIP52c2. It is recommended that it be initially set to 10,000 Dai worth of MKR (at the previous day’s price of MKR on Coinbase at 4:00pm EST) and can be modified via subproposal.

MIP52c3 is a Process MIP component that allows the amendment of the burn amount in MIP52c2

If onboarded through a MIP52c3 subproposal, the amount and pricing mechanism are thereon utilized for the purposes of MIP52c2.

MIP52c3 subproposals have the following parameters:

  • Feedback Period: 1 week
  • Frozen Period: 1 week

MIP52c3 subproposals must use the template located at MIP52c3-Subproposal-Template.md. This template is considered ratified once this MIP moves to Accepted status.

12 Likes

@Davidutro I can’t figure out how to make a PR in the MIPs Github, could you lend a hand?

dming you Greg

Is there any way to allow disputes that result in a positive vote to return the MKR to the sender in an immediate dispute resolution? Just thinking personally it would be extremely difficult to justify the expense of submitting one (currently denominated in USD, that’s well over the median annual US household income).

I think there should definitely be a deterrent in place to prevent bad faith actions/ rushed decision making, but if there’s no way to recover the cost to petition many people in the DAO will not realistically have the option to submit an immediate dispute resolution. While the possibility of returning doesn’t solve this capital restraint, it at least makes the decision considerable for a wider array of contributors (especially with vesting rewards in mind).

6 Likes

I’d argue this is a feature not a bug. This will be abused if it’s not very difficult to do.

1 Like

Agreed. But if the capital is returned when the DAO agrees with the dispute there is incentive for submitting a meaningful one, even if you are more capital constrained. Otherwise it seems it’ll be up to someone to make the decision to burn the equivalent of a luxury vehicle to get an important matter sorted, leading to a heavier opportunity cost and more likelihood that bystander effect would sink in.

3 Likes

Yes, as a MKR holder this is what I would want the internal calculus to be. It’s a huge ask to have an immediate vote, it needs to be sufficiently expensive. If they don’t want to do it this way, they can go through the first component which is free.

4 Likes

Could you then stipulate in the MIP that if the vote goes in favour of the Immediate Dispute Resolution activator they get their MKR back?

Very interesting addition Greg! Just left the Foundation and already putting in work!

1 Like

Don’t want to beat a dead horse here, so last comment on this line of questioning as overall I am very excited about this proposal.

Suggestion

Is it worth considering returning a percentage in the case of a successful outcome for the immediate path?

Example

If someone in the community had 2x the Burn requirement, it would only make sense for them to intervene if not doing so would creator the MKR price by more than 50%. Returning even just 25% of the MKR here would lower the cost/benefit for the above caller to a 37.5% expected drop in MKR price, while retaining the full opportunity cost for maliciously called disputes.

Reasoning

If we wish to count on members to do the right thing when a situation is severe enough (but not necessarily going to heavily impact MKR price) having a rebate percentage not only lowers the calculus on the financial incentives for doing the right thing, but adds a social validation for making the “right” call. This would, in effect, lower the cost of immediate responses made in good faith while still keeping those made in bad faith at full cost.

4 Likes

Should be 100%. Augur has this functionality for dispute resolutions. There is less incentive for good actors to call out bad actors if they fear that they may lose stake even if the outcome is in their favour no? This still stops abuse if MKR holders get spammed and just vote against the disputer.

Hey Greg–can you define what is an Official DAO Member? Is it an individual/organization that holds MKR, or do you need to get certified as an “Official”?

Usually in PoS networks such as Cosmos, Polkadot, etc., if a governance proposal is made by a Token Holder, he/she, or Entity must stake a specific amount of tokens, and if the proposal passes the Staked Tokens are returned, if it fails they are burned.

I guess as an easy example, if an MKR holder dislike the fact that the BD Team was integrating DAI into the Costa Rican Government (as an odd & silly example), an Official DAO Member can dispute such? Is that an easy understanding of a basic scenario that can possibly occur?

2 Likes

Thank you for putting this proposal forward, @g_dip.

I would like to raise several points that are unclear to me from the current formulation.

How do we resolve ambiguities and who should be responsible for doing so?

In a decentralized system, every stakeholder is bound to have a varying perspective on any issue presented. And yet, we may only have good decision-making if we agree on the underlying concepts.

It’s for this reason that MIP0 states:

A MIP must not have equally valid conflicting interpretations. MIP Authors and MIP Editors must strive to reduce ambiguity. A MIP must be as clear and easy to understand as possible.

I would present the argument that an objective poll describing a dispute is impossible. Inherent bias while formulating complex issues into binary outcomes will prove to be a challenge for any party, no matter how well-willing, and thus also to the voter tasked with resolving such a dispute.

My question is then, who will ensure the issue is well-presented and the outcome is based on valid assumptions?

What does one’s breach of mandate entail?

Is it something more than shaking a finger at a facilitator? It seems to me we would still have to offboard them by using MIP41c5 in case they don’t comply with the outcome. The instant resolution of the conflict is then in essence a non-binding waste of 100 MKR.

While I do believe that a tool for dispute resolution could prove useful in the long run (I don’t think we’ve ran into any major disputes yet), we might need to look for something more light-handed and with less governance overhead, or alternatively a tool for dispute resolution with more serious outcomes for the parties involved. I don’t think we can easily get the advantages of both.

6 Likes

@Aaron_Bartsch @prose11

The idea of the Burn Amount is to impose a tax on forcing the MKR holders to vote outside of the normal governance cycle. I like the idea behind returning the funds but the idea that you might not get it back should be the first thing you think about before calling an emergency vote. My preference would be to have users of this MIP do the following:

  1. Call an emergency vote and burn the MKR
  2. Make a custom proposal (based on what they believe is a fair recovery rate) using the first component of this MIP that the MKR holders then vote on in the normal governance cycle

Does that solve the perceived unfairness for you?

3 Likes

The line in the sand I chose to draw was “elected.”

a Core Unit, Mandated Actor, or any other person or group directly or indirectly elected by MKR holders (the “Official DAO Members”)

So basically anyone who has a mandate given to them by MKR holders. I don’t think it would be possible to impose their will on anyone not at least indirectly under their control.

2 Likes

The premise of this MIP is that any stakeholder should have the ability to present a Yes or No question to the MKR holders. If the user of this MIP leaves ambiguity in the question, it will fall to the governance facilitator to direct the outcome. By the time someone is aggravated enough to use this MIP, I think they will remove any ambiguity from what they are looking to achieve. I’d also encourage you to think about a scenario where two core units are in disagreement - a mechanism like this will be a “need to have” not a “nice to have” should we wish to avoid a stalemate.

This is a great question and cuts to, in my opinion, the core of decentralized governance. There’s really not anything that this MIP explicitly does in terms of punishment, and that is by design. But, if a person or unit is in breach of their mandate and the MKR holders have made it clear, it will likely compromise the credibility of governance itself should further action not be taken. This MIP will not presume to know what the appropriate further action should be, it just gives that further action a foot to stand on.

2 Likes

Offering a path without more governance overhead

I believe having a clear path to a rebate for the person successfully calling the Immediate Resolution does make it better. However if the goal is to cut down on Governance overhead, it might make sense to defer the decision to the Governance Facilitators. This can get problematic (especially considering I’m suggesting it as someone who wants to be a Governance Facilitator), but I think can be solved with language like “X will happen, provided the Governance Facilitators do not consider the passed resolution malicious or out of order.”

Disparity of the current proposal

Whales and early builders can get an expedited decision while everyone else has to wait a month. In order to align incentives perhaps there will always be an element of that, but without a rebate for a “good” use of the immediate resolution option you not only have to rely on whales, but altruistic ones should an urgent situation arise.

As @Elihu pointed out MIP41c5 allows for removing of a facilitator if that is the goal of a dispute, but that process takes at least 1 month as defined by the MIP. I believe we need quicker options with more nuance than only being able to call for removal. This MIP provides for both of those desires, but for a much smaller section of the community. If a community member has a dispute it’s certainly easier to make the case to someone with that level MKR that they can get the tokens back if they think the community will agree with the resolution to the dispute.

2 Likes

Think of the other side of this though… You might find yourself in a situation where MKR holders are not siding with you in a dispute simply because they believe the frequency of dispute resolutions is becoming too burdensome and want to deter people from using this MIP.

The purpose of the immediate resolution is for extremely important issues. If the user of the MIP can’t afford the “tax” then I’d argue that the majority of the time the issue won’t be impactful enough to justify an emergency vote. Keep in mind, there’s nothing stopping a Governance Facilitator from calling an emergency vote whenever they’d like, so it’s not like there’s zero recourse. I just truly believe that without proper spam protection and a credible risk of loss, this MIP will be abused.

1 Like

I think I’d just rather not have an urgent option then. If the thesis is that Governance Facilitators can take care of the urgent situation for anyone that doesn’t have that much MKR lying around, why should those that do be treated differently?

Why not just lower the burn amount so that more people can afford it? That’s why it’s a parameter.

Brings it back to the heart of my question. No matter where you draw the line you end up with a subset that can afford to burn the capital that is able to get special treatment and anyone who cannot will not receive the special treatment, regardless of the merit of their concern.

Having a rebate helps this, but ultimately it seems like it would be better if someone could request a dispute be dealt with urgently and either be permitted to do so by the Governance Facilitators or go through the full month cycle.

2 Likes