Da Hongfei discusses elastic manageability, a governance philosophy applied to N3

Neo N3’s future governance process is rooted in a philosophy of multi-party inclusion and the balance between decentralization and centralization. In a recent Coin Telegraph article, Da Hongfei wraps these concepts together, among others, into what he calls elastic manageability.

Da notes the digital world can no longer be separate from the physical realm and its traditional democratic processes. With the merging of blockchain into traditional business systems, applications, and other aspects of daily life, boundaries between social, economic, and corporate governance become blurred. Plus, a blockchain network’s broad user base cuts across various regional legal jurisdictions, and these requirements must be satisfied.

Further, network participants have diverse desires, compounding the complexity of creating a fair and just governance structure. Consensus nodes, council members, token holders, businesses building N3-based products, and developer communities all have unique motives and incentives.

For blockchain networks, being inclusive of all network participants while also offering a sensible governance strategy that can operate in various legal jurisdictions requires a delicate balance. The concept of elastic manageability, Da believes, is a way to strike that balance.

Elastic Manageability in N3 governance

In Dec. 2020, Da delivered a keynote speech at a summit in Sanya, China, where he introduced governance as the most “important and sophisticated” change in N3. The elastic manageability philosophy is rooted in Da’s pragmatic idealism – networks should identify obstacles and their workarounds while also being compatible with existing legal and financial systems.

N3 features a new economic and governance model designed to decentralize the Neo network and its decision-making. Under the new model, NEO holders’ votes will establish a Neo Committee of 21 members. This committee will oversee the management of network upgrades, fees, and other Neo operation-based issues. Of these 21 members, the top seven by number of votes will become consensus nodes, responsible for producing blocks.

The balance between centralization and decentralization is achieved via all NEO holders’ ability to appoint the committee members and consensus nodes via their votes. Further, this approach adjusts for differing local regulations. In his keynote speech, Da said:

For example, [consider] the case of a particular type of transaction, [where] more than 1/3 of the consensus nodes are influenced by local jurisdiction and cannot pass this type of transaction. The effect of regulation on this particular type [of] transaction is simultaneously reflected in the Neo network. Under the framework of dynamic elections, NEO holders will then decide whether to continue to vote for the affected nodes in the next term.

N3’s governance process accounts for business and enterprise needs, technical requirements for node operators, and local regulations, all factors that may affect voter choice. Da believes that through his elastic manageability philosophy, incorporating the interests of all “opens up the path for sustainable and responsible growth both in the on- and off-chain world.”

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