5 min readMar 14, 2022

With less than 24 hours to go, the vote on Juno network’s Prop 16 has been a crucible for all validators. At this point, it does seem that the proposal will succeed, and what happens next will be very interesting.

What is Prop 16?

For those unaware, Juno’s proposition 16 proposes seizing tokens worth one hundred six million dollars from a private wallet on the Juno network to their “community” pool. This amount is $14mm less than when the vote began because the token value is falling.

See Prop 16 on Mintscan.

My involvement with Juno is a proof-of-stake validator on their dPoS network.

Block Pane voted no. We usually choose to vote Abstain on contentious issues. Prop 16 is one case where it is impossible to be impartial for several reasons.

A new world of DAO politics

Before expanding on the reasons, I would like to focus on the political atmosphere. The general sentiment I have seen on Prop 16 echoes popular politics where liberal and conservative opinions are at odds. I am not entirely surprised by this, nor am I surprised by how toxic some of the discussions have been on social media. It’s a microcosm (pun intended) of the world in which we live.

However, it is, for me, the first time I’ve seen governance used to seize property in the cryptocurrency community. Cryptocurrencies were historically (past-tense of importance in this case) designed around libertarian principles. That property ownership is sacrosanct, and that money should not be censorable. My Twitter objection to Prop 16 recited these principles and has even resulted in an accusal of me being the source of the world’s problems. (Not likely, but I am often wrong.)

One thing for sure is that the rules have changed. Tonight I’ve been reading “The Sovereign Individual” by Davidson and Rees-Mogg. Despite being written in 1999, it is remarkably prescient in the case of Prop 16. One of the topics it covers is extra-national sovereignties, and I think Juno is an excellent example of this emergence. We live in a new world and are actively shaping it. If I am to survive, adaptation and fluidity are required. Does my rigidity on this issue make me an anachronism? I recommend the book but suggest skipping the chapter on y2k.

What is a validator’s job?

It is my job to protect the network as a Validator. This protection is not a social contract or a political one; it is entirely technical. My job is literally to add blocks to the chain in an immutable and verifiable manner and punish validators who would attempt to violate this contract. Given this view, asking a validator to “adjust” an account balance is a ghastly and horrifying proposition.

Finally, as the last point: the only readily identifiable entities associated with voting are the developers and validators. I am unsure of the consequences that come from this exposure. It’s an impossible choice as a validator to vote at all, yet I choose to uphold my responsibility to protect the chain as part of my duty. I feel my abstention or not voting would be a dereliction of duty.

Shut up, tell us why you voted no!

So without further adieu, let’s examine the reasons Block Pane voted no for Prop 16.

“The facts are that the Juno genesis stakedrop was gamed by a single entity. Willingly or unwillingly is not relevant to this matter.”

Acting willingly or unwillingly is relevant here. For an actor to be malicious and justify appropriating their property, we should first ask if there is Mens Rea and whether they intended to gain an unfair advantage.
The whale created the first account involved eight months before the snapshot date. The last? Two months. It’s impossible that the whale could predict both the date of the stargate release and the announcement of a Juno airdrop.
It’s unlikely the reader is aware, but I have been in the information security profession for more than twenty years. I have responded to some gnarly hacks throughout my career. The most important part of documenting a security incident is the timeline. Correlating actions to timing can frequently identify or eliminate malicious behavior. The whale created the accounts months before the snapshot and almost a year before the announcement of the snapshot. These criteria do not meet my standards for a “malicious” high-water mark; I find it highly unlikely this was intentional.

“The whale gamer poses a growing risk to the network and the stakedrop error may be corrected. “ and “High risk to on-chain governance (already has half of quorum)”

The governance threat is exaggerated. Why? I think the Prop 16 vote shows the community has much more engagement and vote power than the whale could muster. This vote has 88.4% of staked power applied at writing. The whale has less than 10%.
The top validator has more than 8% of the power. I ask you to pause for a second and think this over; it’s not much less power than the whale when you consider the high turnouts that governance musters on Juno. Is validator-censoring next? Is any large wallet safe?
Once it’s possible to appropriate tokens, what happens when FINCEN, INTERPOL, or other bureaucrats come calling?

“Potential of buying validators with delegations in order to bribe them away from acting,” and the opposing statement: “Core-1 will compansate [sic] affected Validators with the next official delegation round”

Delegation power redistribution was the first major red flag in the proposal when I read it. Prop 16 points out that the whale has undue influence by staking validators. But then, Core-1 offers the same undue influence.
A significant consideration in the rejection of Prop 4 was that the whale would distribute their stake across multiple validators.
I am in the very fortunate position that I do not have any delegations from the whale, and my “no” vote would be substantially harder to argue, had I. (Also, please whale: do not delegate to me after this.)

I’m not going to cover every point in the proposal, but any of these three are sufficient reasons to vote “no.” Much of the arguments have been covered by others. Suggested reading:

Good news?

This proposal is not the proverbial “cliff.” It’s merely a signaling proposal. Many may not know this, but it means little in terms of the actual functioning of the chain. The following proposal, where code changes and blockchain state is modified, will be when the redistribution of tokens occurs. There is still time to reconsider the implications of making Juno a censored blockchain.

Forward

What happens next? I can only speculate, but at writing: on the week, $JUNO is -17% vs. $BTC’s +0.8% and $NETA is a whopping -31.4%. The very existence of this proposal has already exposed Juno to significant volatility and violated the trust of many large token holders. Did it cause more damage than the whale would? Will there be a massive outflow? I don’t know. The next big question is what fallout can we expect from the resulting governance proposal: will it result in a hard-fork, good validators abandoning Juno, or nothing at all? There are complicated decisions in the future for stakeholders. But one thing is sure, many token holders will vote by liquidating, not through governance.

Finally, in closing, I’d like to point out how this has created a no-win situation for all validators on Juno. By proposing this governance vote, “Core-1” has forced validators to choose between losing community backing or confiscating $106mm in funds. That’s quite an amount, and if there aren’t repercussions to be had, I would be amazed.