Understanding Metis: Leading the way to decentralization

Centralized sorters have become a nuisance.

Written by: Kevin Liu, co-founder of Metis and CEO of ZKM

Compilation: Block unicorn

In the ever-evolving world of blockchain technology, the concept of decentralization has become a guiding principle, and for Ethereum in particular, decentralization is a key differentiator and advantage compared to other blockchain ecosystems. However, the question remains since Ethereum took its first steps: How do we achieve decentralization?

As stated in this article, Vitalik proposed the milestones that Ethereum Rollup needs to reach to achieve full functionality and true decentralization. By going through these stages, Rollup will say goodbye to its initial development phase and satisfy the most challenging side of the blockchain trilemma.

Vitalik’s proposal provides a good overview of the “how”: Rollup should become fully functional and technically decentralized. However, decentralization is not just about technology, it is a complex architecture that we need to build. So, “how” can Rollup achieve this elusive goal of decentralization?

As a co-founder of Metis, and then leading a project dedicated to building the infrastructure to implement hybrid rollup technology (ZKM), it’s this “how” that keeps me up at night, tossing and turning.

Stages of Decentralization: Strategic Blueprint

The journey to full decentralization is divided into four stages:

**Phase 0: Cold Start – Laying the Foundation for Decentralization Phase 0, the “cold start”, launches the blockchain project and focuses on building a strong infrastructure. **Similar to the heavy construction phase, the core team plays a central role in development and management. Although community-wide participation is encouraged, taking control during this heavy construction phase can still be a challenge.

Amid the complexity of Phase 0, community engagement is critical. While the core team leads the heavy lifting, the project encourages community participation through activities such as voting and token delegation. The problem, however, is that these activities only operate within limited parameters, providing a semblance of decentralization.

To truly drive decentralization, strategic community engagement is crucial. In addition to token-based voting, it is equally important to foster true community ownership through transparent communication, education, and collaboration. Building a community that is truly invested in the success of a project lays the foundation for meaningful decentralization.

Stage 0 Brief Summary:

1. Goal: Lay the foundation for the business.

2. Focus: Build a solid foundation for future development and decentralization efforts.

3. Approach: Focus on improving efficiency and execution by building the team, while giving the community a sense of ownership of the project, even if it’s not yet literal ownership.

Phase 1: Infrastructure Decentralization—Leveraging the Power of Utility Tokens

Utility tokens play a dual role in Phase 1. 1) In addition to being tools for transactions, they also become tools for cybersecurity and decentralization. 2) Real contributors use utility tokens for staking, mining, voting and governance, actively shaping the development trajectory of the project.

Empowering real contributors: a collaborative approach

Phase 1 heralded an era in which the construction and operation of infrastructure was no longer the exclusive domain of central authority. True contributors, actively contributing to network growth, receive tools and incentives for key processes. This democratization is in line with the principles of decentralization and fosters collective ownership.

Recognizing the importance of infrastructure decentralization is critical. As network infrastructure becomes more decentralized, it becomes more resilient, adaptable, and able to withstand challenges that may arise in the dynamic realm of blockchain technology.

By eliminating a single point of control, harnessing the power of utility tokens, and empowering true contributors, blockchain projects lay the foundation for a more robust and participatory ecosystem. This evolution is not an isolated achievement, but a strategic stepping stone towards a decentralized future.

Stage 1 Brief Summary:

1. Goal: Eliminate a single point of control in technology.

2. Focus on: Decentralizing control and ownership of key components and leveraging utility tokens to secure the network.

3. Method: Empower real contributors to participate in infrastructure construction and operations, cultivating a more resilient and censorship-resistant network.

Phase 2: Revenue Sharing - Aligning Interests to Achieve Sustainable Growth

Many blockchain projects and ecosystems face difficulties in dealing with the different goals between short-term token holders and long-term stakeholders, such as the core team and major contributors. Short-term token holders prioritize immediate price fluctuations and seek quick returns, while long-term stakeholders want to build a sustainable future.

Changing thinking: from airdrop mining to ecosystem participation

The key to resolving these conflicts lies in changing the mindset of community members. Beyond the tendency to join the ecosystem just for the sake of airdrop mining, participants must embrace a more active role and participate in the growth of the ecosystem. This shift means understanding that rewards are earned through active participation rather than passive speculation.

Metis: Decentralized Sequencers (block sequencers) through revenue sharing

A vivid example of this transformative approach is Metis’ decision to decentralize its Sequencer. Metis uses a revenue sharing model with all node operators, creating a system that allows token holders to stake their assets to earn revenue and mining rewards. This approach establishes a direct relationship between community participation, staking to ensure network security, and the overall value of the Metis network.

Ecosystem Growth and Stakeholder Benefits

The beauty of this model lies in its self-reinforcing properties. More active nodes and increased community participation lead to higher levels of staking, enhancing the security of the network. As the Metis ecosystem expands, attracting more dApps and builders, the overall value of the network grows. Therefore, both short-term and long-term stakeholders benefit from the prosperity of the ecosystem.

Coordinated Interests: A Prerequisite for Sustainable Development

Phase 2 focuses on coordinating the interests of all relevant parties in the ecosystem. By incentivizing active participation and contribution, rather than passive speculation, blockchain projects can foster a community truly committed to the long-term success of the network. The shift from short-term gains to a collective vision of sustainable growth ensures that the interests of all stakeholders are aligned, laying the foundation for sustainable development.

Revenue sharing is more than a mechanism for distributing rewards; it is a transformative force that reshapes community dynamics and aligns interests. As Metis demonstrates, this approach sets the stage for a decentralized ecosystem where each participant is not just a beneficiary, but an active contributor to the collective success of the project.

Stage 2 Brief Summary:

1. Goal: Coordinate the interests of short-term token holders and long-term builders.

2. Focus on: Introducing a revenue sharing mechanism to encourage active community participation.

3. Approach: Shift community thinking from short-term gains to active participation in ecosystem growth, such as Metis’ model, where revenue sharing encourages collaboration and contribution.

Phase 3: Comprehensive Governance - Address Complexity with Two-tier Governance

The ultimate goal of the entire journey is to establish a comprehensive governance structure that coordinates the interests of the wider community, small token holders and key stakeholders. While voting rights based on the number of tokens may run the risk of being dominated by large holders, a more nuanced approach is required. The solution lies in taking inspiration from modern political structures and creating a two-tier governance system that ensures inclusivity and balances the influence of various stakeholders.

Solve the problems of large households

The challenge at this stage is twofold: empowering small token holders to influence ecosystem decisions while preventing undue influence from large token holders. A traditional single-layer governance structure based solely on the number of tokens may inadvertently favor whales, obscuring the voices of smaller contributors and community members.

Metis’ two-tier governance model: Commons and Eco Nodes

Metis’ two-tier governance model includes Commons and Eco Nodes. Commons is similar to a decentralized autonomous organization (DAO), where every community member can create, join, and form interest groups.

Commons work similarly to parliaments in most Western political structures. In Commons, small token holders pool their voting power and collectively stake it on the governance platform, thereby increasing their influence. This collective power gives smaller token holders a more substantial say in the decision-making process, balancing the influence of giant whales.

Commons as the first layer of governance: a democratic forum

In Commons, members can submit proposals, participate in debates, and jointly decide on matters that affect the ecosystem. This vibrant and inclusive space ensures that even small token holders can actively participate and contribute to the project’s governance. Proposals approved by the Commons then proceed to the second level of governance.

Eco Nodes as the second layer: guardians of long-term interests

Eco Nodes form the upper layer of governance; they are made up of core builders, contributors, and stakeholders who are deeply committed to the long-term success and growth of the ecosystem. Eco Nodes function similarly to the Senate in most Western political structures. Unlike Commons, Eco Nodes have a double responsibility - validating proposals and taking decisive action. Their voting power is not determined solely by the number of tokens; instead, it is finely tuned based on reputational power. Prestige power is earned through past contributions, creating a more elitist system.

Balance and Ensure Accountability

The two-tier governance model maintains a delicate balance by allowing small token holders to collectively influence decisions while allowing Eco Nodes to act as gatekeepers, reviewing proposals for soundness and long-term viability. The system is designed to be flexible, allowing Commons to evolve into Eco Nodes when certain criteria are met, while Eco Nodes may be punished when malicious behavior occurs. This balanced approach ensures accountability and promotes a dynamic and responsive governance structure.

By leveraging the collective influence of the Commons and incorporating the wisdom and experience of Eco Nodes, Metis aims to ensure fair and transparent representation of all stakeholders. This innovative governance structure demonstrates a commitment to true decentralization and community empowerment.

Stage 3 brief summary:

1. Objective: To establish appropriate structures for different types of stakeholders.

2. Key focus: Create a two-tier governance model that balances the influence of various stakeholders, including small token holders and key contributors.

3. Method: Establish a Commons layer for community participation and proposal approval, and an Eco Nodes layer for verification and decision-making to ensure a fair and responsible governance structure.

Summarize:

The time has come to move away from general extended discussions of milestones and toward specific and unique steps on the road to decentralization. Optimistic Rollup is one of the first to decentralize its Sequencer and share the revenue. The other is a two-tier governance structure that aligns the interests of the blockchain project’s core team with those of the token holder community.

By following these steps, we can lead harmoniously with the seemingly conflicting goals of decentralization and growth. I can’t wait to see other blockchain projects come up with fresh ideas on their own journeys.