It's Too Soon for On-Chain Governance

That's the only reliable conclusion to draw from the chaotic, contentious rollout of EOS, the $4 billion project whose consensus model was touted as a way to enable smoother governance and scalability in a blockchain industry beset with conflicts and decision-making gridlock.

The EOS Core Arbitration Forum, a body set up to resolve disputes, sent out a memo ordering those block producers to freeze 27 supposedly sketchy-looking accounts.

One, called the ECAF's order a mistake and argued that its handling of the problem did more harm to confidence in EOS than any lost funds that the suspect accounts might have stolen, his company wants to rewrite the entire EOS Constitution.

In reality, as a way to assess on-chain governance mechanisms such as EOS's delegated proof-of-stake consensus mechanism, there's a lot more at stake than entertainment.

Along with saga at Tezos, another very well-funded on-chain governance project, which was rocked by disputes between the founders and the first director of the foundation overseeing its $243 million war chest, the EOS disaster offers a strong reminder of how entrenched human mistrust can be difficult to overcome.

I'm not willing to say that on-chain governance won't ever work - or that our only choice is to either live with disorder, acrimony and gridlock or turn to external legal solutions that expose user identities and require a dependence on external government bodies.

Well, for now - and this will be anathema to crypto-anarchists and some blockchain libertarians - the solution likely lies in recognizing the limits of the algorithms and relying instead on human-led, legally defined institutions for dispute resolution and off-chain governance.

Here, the internet's governance offers a model, as father-and-son team Don and Alex Tapscott laid out in a useful assessment of the outlook for blockchain governance for The World Economic Forum.

The Internet Corporation for Assigned Names and Numbers, the Internet Engineering Taskforce and the Worldwide Web Consortium have worked fairly well as trusted avenues for governance and dispute resolution.

As of now, on-chain governance models like that of EOS clearly don't.