Interview Questions for Nicolas Biagosch
In the dynamic realm of blockchain technology, few innovators are as intriguing as Nicolas Biagosch, one of the driving forces behind Q Protocol. With a keen understanding of the intricate mechanisms that govern this digital landscape, Biagosch has made substantial strides in shaping the future of blockchain governance.
The principle 'code is law' has long been considered the cornerstone of blockchain technology. It signifies the idea that rules embedded in blockchain protocols are unalterable and strictly adhered to, eliminating the need for intermediaries. However, with evolving complexities and a growing user base, the question of how these protocols should be governed has become increasingly relevant.
Nicolas Biagosch, with his pioneering work on Q Protocol, is leading the charge in addressing these critical issues. His contributions are helping redefine the concept of 'code is law,' offering nuanced perspectives on blockchain governance, and forging a path for the broader acceptance and application of this revolutionary technology. We delved into an enlightening conversation with Biagosch about Q Protocol, his insights, code-is-law, and his vision for the future of blockchain.
Can you elaborate on how governance security serves as the crucial missing piece in facilitating the mass adoption of public blockchains?
Almost every type of business needs two types of security: Transaction security and governance security.
Transaction security means having certainty that simple — we often use the term “deterministic” — transactions work like sending money from A to B.
Governance security comes in whenever things get more sophisticated, like forming a company. You have certain rules that are clear, for instance, the minimum capital you need to put in — this is covered by transaction security. But a lot of things can happen that we can’t foresee. Like, what happens in the case of an insolvency? This gets complicated really quickly. For these kinds of questions, you have a general framework (e.g., laws) that will need to be interpreted (e.g., by a judge in a court case). This is what we call governance security.
Blockchains provide transaction security, and they do this even better than traditional legal systems. This is great, but the problem is that transaction security is not very useful on its own. If you want to set up interesting business models, you also need governance security.
Therefore, the core thesis in the Q community is that we need to improve governance security in the blockchain space for it to take off. Transaction security is already great, but the next wave of interesting applications and adoption will only happen if we add governance security.
The recent hacks in blockchain governance, such as the $100 million theft from Mango Markets and Tornado Cash, have raised concerns. What factors contributed to this surge in blockchain governance hacks, and how could these incidents have been prevented?
Current governance structures in most DeFi applications make it way too easy for a small group of people to manipulate the underlying protocols. Manipulation can happen through multisigs controlling key parameters or token holder votes.
The answer is simple: Elements critical for the security of a DeFi protocol should not solely be controlled from within the protocol. Having some external oversight of those elements would go a long way in improving DeFi security and preventing governance hacks.
You've mentioned that the lack of an external anchor for governance hinders innovation. Can you explain this concept further and provide examples of how this holds true in the blockchain industry?
Within the blockchain industry, we take it for granted that we want the strongest level of security for transactions. This explains the success of Ethereum. For applications built on Ethereum, its network provides an external security anchor for all transactions, i.e., the execution of smart contracts.
Ironically, though, when it comes to governance, application developers tend to choose the weakest level of security: A kind of “self-policing” where some key people or a small set of token holders call the shots.
As long as governance security is not improved, we will continue to see severe governance exploits, and that really limits what people are willing to do on a blockchain. Only externally anchoring governance security will change this in a meaningful way. My conviction is that if we manage to solve this problem, we will see a whole wave of new and exciting innovations.
The 'code-is-law' mantra has long been a staple in the blockchain community. Could you explain what this concept entails and why you believe it might be flawed? Why do you think there haven't been substantial efforts to change or challenge this concept?
The term “code is law” was introduced by American law professor Lawrence Lessig long before blockchains existed. What he said was that, effectively, computer code has some properties that fulfill a similar function as certain laws. If you have a computer program, you can tell in advance what will happen when you execute it — in certain areas, code can, therefore, augment or even replace the enforcement of rules by law.
The term has later been adopted by the crypto community. There is absolutely nothing wrong with it; however, it is often used overly simply. Of course, code does not replace the law. There are many areas of life where code does not help. Human relations are much richer than what can be coded in an “if-this-then-that” logic.
So, what is flawed is not the concept per se but how it is often used today. Some people might abuse the term knowingly, but I believe mostly this can be blamed on the human tendency to over-simplify things. Whatever the cause, within the Q community, we are trying to change this.
One of the features of Q Protocol that stands out is its promise to eliminate any risk of centralization, thereby preventing blockchain governance exploits and crypto theft. How exactly does Q achieve this, and what makes it immune to these risks?
A caveat first: no protocol can ever fully be immune to risks, but Q can meaningfully reduce those risks. The way this is done comprises three steps. Firstly, the protocol rules are explicitly laid down in a constitution, which is a binding legal document. Secondly, a system of checks and balances ensures that those rules can be effectively enforced on-chain. And thirdly, there is a dispute resolution mechanism that ensures that disputes can be settled within the protocol.
These three elements are used for the Q core protocol itself. Still, they can also be used by applications building on Q “as-a-service” to increase security and avoid governance exploits.
Lastly, could you shed light on the market dynamics driving demand for Q Protocol? What key trends should we watch out for in the near future?
I believe that demand for the Q Protocol will be driven by the desire of developers and innovators to build decentralized applications that have a real impact on people’s lives. Adding governance security to the blockchain space lets you build things that you couldn’t build on blockchain rails before.
Trends that support this are the movement to bring more real-world on-chain, advances in decentralized identity, experiments, and innovation in defi governance, and lastly, increased regulatory scrutiny, which forces protocols to truly decentralize.