Feb 26, 2019 · 38m · a16z
a16z Podcast | Voting, Security, and Governance in Blockchains and Cryptonetworks
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This episode of the a16z Podcast features Cornell Tech PhD student Phil Dayan and a16z Crypto partner Ali Yahya discussing the intersection of voting theory, crypto-economic security, and governance in permissionless blockchain networks. They analyze systemic vulnerabilities ranging from Dark DAOs and vote buying to quadratic voting limitations, transaction ordering exploits, and gas arbitrage.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The host holds 4.9% of the talking time here. How this is scored →
The host as informed peer 5.3 Guest teaching 6.8 Guest disagreement 1.4 The host pushing back 1.5
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 13:53 Phil dismantles identity-based voting solutions
Phil firmly counters the idea that identity verification stops vote buying, explaining how key delegation via Dark DAOs bypasses anti-Sybil checks.
Hardest push from the host ▶ 15:49 Ali defends one-coin one-vote modelAli pushes back against full rejection of coin-based voting by pointing out that staked capital ensures real economic weight and deters trivial Sybil attacks.
Biggest teaching moment ▶ 19:56 Phil explains Dark DAO attack vectorsPhil educates the host on how private smart contracts and trusted hardware render traditional cryptographic coercion resistance ineffective.
The host holds their own ▶ 35:31 Ali explains Ethereum gas storage pricingAli demonstrates deep technical fluency by taking over the explanation of Ethereum's state deletion refund mechanism.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Real-World vs. Electronic Voting Vulnerabilities | 5 | 5 | 1 | 1 | The host Ali demonstrates solid domain knowledge by accurately summarizing three key real-world vote-buying deterrents from Phil's work. Phil expands on this by framing the evolution from receipt freedom to coercion resistance in electronic voting. | |
| Blockchain Voting and Permissionless Governance Models | 5 | 6 | 1 | 1 | Ali frames blockchain governance using Vitalik's coordination model and categorizes governance levels from parameter setting to protocol amendments. Phil elaborates on permissionless cryptography requirements and historical consensus protocols. | |
| Plutocracy, Identity Verification, and Quadratic Voting | 6 | 7 | 2 | 3 | Ali raises common arguments defending coin-holder voting as Sybil-resistant, prompting Phil to explain how Dark DAOs undermine identity verification and quadratic voting. Ali offers gentle pushback by emphasizing capital commitment as a safeguard against trolls. | |
| External Incentives and Inter-Chain Attack Vectors | 6 | 6 | 1 | 1 | Phil explains inter-chain attack vectors, while Ali reinforces the premise by articulating how analyzing token voting in isolation ignores external profit incentives from competing networks. | |
| Dark DAOs and Private Vote Buying Cartels | 5 | 8 | 2 | 1 | Phil delivers a detailed technical breakdown of Dark DAOs, trusted hardware, and private smart contract vote-buying cartels. Ali contextualizes the threat within the broader philosophy of decentralized governance. | |
| Vote-Buying Vulnerabilities in Proof-of-Stake Consensus | 3 | 7 | 1 | 1 | Ali prompts Phil on how proof-of-stake is impacted by vote buying. Phil explains how liquidity locking and slashing do not prevent Dark DAOs from extracting value via transaction reordering and front-running. | |
| Commodity Resources, Useful Work, and Systemic Risk | 6 | 7 | 2 | 3 | Ali presents the argument that ASIC-bound resources provide superior economic security compared to commoditized hardware. Phil responds with nuances regarding Goldfinger attacks and rental markets. | |
| Transaction Ordering, DEX Front-Running, and User Fairness | 6 | 8 | 1 | 1 | Phil details front-running on DEXs and the creation of GasToken. Ali demonstrates clear expertise by articulately explaining Ethereum's storage refund mechanism to the audience. |
Statements from this episode (18)
Dayan: Vote buying is empirically cheap due to poverty and voter apathy
“Like, vote buying in general Is empirically pretty cheap for two reasons. Number one, it's actually the poorest and, like, least advantaged people that are the most inclined to sell their votes. And number two is most people are disinterested in most elections…”
Yahya: Blockchains can make bribery and vote buying more efficient
“Blockchains can be used to increase the efficiency and effectiveness of bribery and vote buying.”
Dayan: Real-world governance mechanisms fail on-chain without assuming rational adversaries
“Your systems need to be strong even in the presence of economically motivated adversaries, and they need to be secure assuming people are rational rather than honest. So we don't get to lean on this sort of honesty that we have in the real world in blockchains…”
Yahya: Current blockchain governance systems will likely devolve into plutocracies
“Today's governance systems and sort of blockchains and crypto networks, the way that they exist today will likely devolve into plutocracy simply because the mechanisms for vote buying are so effective as you've described.”
Dayan: Quadratic voting fixes governance flaws but relies on identity verification
“Quadratic voting, where you actually allow vote buying. So you allow people to buy votes, but only at an exponentially increasing price. And this may kind of look like plutocracy because you're allowing people to buy votes, But if you actually do the math on t…”
Yahya: Lack of identity mechanisms leaves crypto governance vulnerable to vote buying
“I think today, because we lack that kind of a mechanism, people end up gravitating towards this simple and somewhat, perhaps somewhat naive one coin, one vote model, which is vulnerable to this vote buying attack.”
Dayan: Larger crypto projects have incentives to buy votes in smaller competitors
“If these two very large projects are approximately the same size, or one is a little bit bigger than the other one, or one is twice as big as the other one, or something like that, it's in the economic interests of everyone who holds coins in the bigger projec…”
Dayan: Dominant blockchains are economically incentivized to 51% attack smaller forks
“If you have a fork that's like 10% of the size of a project, and this fork could potentially impact the price of the larger project, it's absolutely in the interest of that larger project to launch attacks on that base layer proof of work vote and do things li…”
Dayan: Trusted hardware breaks all classical coercion-resistant voting schemes
“Trusted hardware, which is a new technology, Sort of breaks all classical coercion resistance voting schemes in the blockchain world and in the regular election world.”
Dayan: Mere existence of a Dark DAO can shake confidence in votes
“If I were to launch a dark DAO, I might not even need to necessarily have people participate in it. Just its existence might be enough to shake people's confidence in that underlying vote.”
Dayan: Dark DAO vote-buying attacks will become realistic nightmare scenarios at scale
“Blockchains today are a drop in the bucket of like the world financial system, and the incentives just aren't there yet. But if we are to use these technologies, and if we are to scale things, I think these are absolutely realistic scenarios and potentially ni…”
Dayan: Dark DAOs can bribe Proof-of-Stake validators to execute consensus attacks
“So what you can do with a dark DAO is start a staking pool where I say, like, you know, let me do my algorithmic trading and decide what order of transactions makes me the most money. You don't necessarily care if someone who's doing a transaction on a DEX get…”
Dayan: Vote buying applies to Proof-of-Work blockchains
“So, so fundamentally to vote buying, it doesn't actually matter what resource you're using. Vote buying works for proof of work too.”
Phil Dayan: Decentralized exchange mechanics enable profitable front-running
“The way these mechanisms that people are building interact with the blockchain is very complex and opens the door for external actors to make a lot of money from front running them and make a lot of money from doing algorithmic trading on the network and every…”
Phil Dayan: DEX front-running market is large despite low trading volumes
“So it's actually a, probably a bigger market than you think, even though DEXs have not seen substantial volume.”
Dayan: A 20-line Python script can easily profit off DEX inefficiencies
“You can just run this 20 line Python script and you can profit off of users in a way that was maybe not foreseen and is not sort of explicitly stated to them because of how inefficient these mechanisms are.”
Dayan: Front-running arbitrageurs bid tens of thousands of dollars in fees
“Subsidize these arbitrage transactions, which often cost thousands and thousands of dollars in fees. Like people are bidding multiple thousands, even tens of thousands in fees on these transactions.”
Dayan: Ethereum storage pricing creates a tragedy of the commons
“So the fact that the miners get payment for storage when the miners actually don't need to store the whole state, and it's the full nodes that, that bear the cost. So this sort of asymmetry between who's bearing the cost, like where the externality is, and lik…”