No-code Web 3.0 January 23, 2022
6 min read

Liquid Democracy: A Blockchain-powered Exercise in Popular Rule

Liquid Democracy: A Blockchain-powered Exercise in Popular Rule
Kelly O'Connor
Kelly O'Connor Code2 / Sophisticated Nomad

Liquid Democracy: A Blockchain-powered Exercise in Popular Ruleđź”—

We are going through an interglacial age, according to some pundits. What was solid and unchanging for a long time is changing and becoming more fluid before hardening again and taking the shape it will preserve for a long time. Looking back from now, it looks like it all started with the subprime mortgage crisis and the ensuing global financial crisis of 2007-2008. Irresponsible financial practices guided by excessive risk-taking burst the housing bubble, threatening the very existence of gigantic financial institutions. The fact that governments bailed out these institutions on taxpayer money brought the inequalities further under the spotlight at a time when families were losing their homes, students were unable to repay loans, and suicide rates were climbing.

What followed was an unprecedented polarization in democratic countries. Feeling once again ripped off by the elites, middle-class people increasingly turned to populist politicians who rode a tide of anger to grab power. Donald Trump in the U.S.A., Victor Orbán in Hungary, Jarosław Kaczyński in Poland, and Narendra Modi in India emerged as leaders masses followed in this tumultuous period.

Another peculiarity about the end of the first decade of the twenty-first century was the rise of social media, content creation, and tech giants that came to dominate the industry. Connecting with online friends and liking and sharing content on social media felt great initially, but we later found out that those tech giants had other motives. Their business models, at least partly, depended on the collection and monetization of user info. One scandal after another revealed that the internet we got in our hands was not what we bargained for.

Today people realize that the internet and online communication are political issues. The struggle for free internet and online privacy is political, too. One of the recent outcomes of this struggle has been Web 3.0. This blockchain-based technology is slated to redefine how data is stored and decisions are made, giving people the transparency and decentralization they dream of.

Decentralized Autonomous Organizations (DAOs) will be central to how people will mobilize in the Web 3.0 era. Nowadays, these organizations seem to be experimenting with a new, promising experiment in democracy that has the potential to give power back to people: Liquid democracy.

Liquid democracy refers to a form of direct democracy whereby participants leverage blockchain technology to express their opinions and enjoy dynamic representation. People use tokens to exercise their votes in liquid democracy. They can even delegate their voting rights to different individuals. These proxies could be trusted friends and family members or domain experts capable of making the right decision about an issue on the agenda. Another interesting aspect of liquid democracy is fractional voting, which involves dividing the voting power among different proxies.

Proxy voting and fractional voting together can take the society closer to a meritocracy, where decisions will be made by experts. In theory, this could bring about a situation where voting power accumulates in the hands of a handful of super-proxies, people trusted by the larger public for their expertise or integrity. There is the risk that these super-proxies might become the new ruling elite of this new way of government, but votes delegated to proxies can always be revoked, eliminating such a possibility. Blockchain technology makes it easy for people to delegate votes to someone, track how they voted, and rescind the authorization if the results are not satisfactory, which promotes accountability.

However, liquid democracy is not without its flaws. One of the biggest concerns about liquid democracy is security. It is all too natural that many people or organizations will stand to benefit from derailing the process. Hacking into the system, manipulating the vote on a proposal about the allocation of funds, and funneling the funds into an account set up for malicious purposes would be very tempting for many actors.

Another risk factor is the transferability of the tokens. Having cast her vote, a person can transfer her tokens to somebody else, who can also vote. Tokens can be locked until the polls close and votes are tallied to prevent this, but it wouldn’t sit well with people who want to be free to do whatever they want with their tokens.

Still another hurdle limiting the prospects of liquid democracy is the level of technology literacy needed. Although the process could feel fairly straightforward for tech-savvy people, it is still somewhat complicated for most constituents.

Last but not least, the political elite who profit from the current system would do anything to stop liquid democracy from taking hold. Replacing the current corrupt system with a true democracy would spell doom for such people.

Liquid democracy as a concept hasn’t reached the level of maturity necessary for wide-scale adoption yet. Nevertheless, we can expect to see its local implementations at the district and municipal levels. With its fractional voting, liquid democracy can offer exceptional granularity into the preferences of residents of a town, which wouldn’t be possible with a yes-or-no vote.

Liquid democracy is a testament to the fact that blockchain technology is not all about fluctuating cryptocurrency prices. Having emerged at a time when democracy, individual rights, and privacy are threatened, blockchain has the potential to solve the real pains of people. Liquid democracy, even in its relatively limited applications, illustrates how blockchain can be leveraged to transform the power relations we have grown used to in the Web 2.0 era.

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