In January of this year, the new Cyber Republic Consensus (CRC) was officially announced to the community. It features Suggestions where any Cyber Republic community member can either upvote or downvote a Suggestion. Suggestions with the most upvotes and community support can then be upgraded into a Proposal, if “championed” by a Council Member. Once championed, the Proposal is reviewed by the three member Interim Council: Kevin Zhang, Feng Zhang and Yipeng Su.
Since late January, there have been three Suggestions that turned into Proposals and were eventually passed: React Native Project (Unity), Hyper Connect, and Elastos Orchard. Each project took weeks or months to turn into a Proposal, along with more waiting time to pass. Currently, some are still waiting on funding. All of these approved projects are funded through the dedicated CR 12 Consensus Node rewards and/or natural inflation of the locked 16.3 million ELA dedicated to the CR.
On May 25, 2019 a suggestion was created by Feng Han (co-founder of Elastos) and Interim Council Member, Kevin Zhang, regarding a project with The World Bank and The Manhattan Fund. The Manhattan Fund is an independent entity, separate from Elastos and Cyber Republic, but with a similar goal. The Manhattan Fund seeks to fund projects to build on the Elastos infrastructure. The suggestion boasted several community upvotes, spirited commentary, and lots of potential for future adoption with the World Bank. However, the next day, the Suggestion turned into a Proposal. This quick turnaround worried some in the community because this Suggestion turned Proposal seemed to have received special treatment versus others, and Kevin Zhang, being part of the CR Council as well as The Manhattan Fund, was the one championing this Suggestion. To be clear, the Suggestion asked for 100,000 ELA of CR funds, not individual community members funds. No one was asked to contribute any ELA, merely to show support for the CRC to approve the funds. However, there were not clear details of how the funds would be used or where the rest of the 1.6M USD value would come from to fund the entire project.
Because CR is not fully launched, all 16.5M ELA gifted by The Elastos Foundation last August are unable to be used until CR goes live with a democratically elected CRC. This is to ensure that the 16.5M ELA are used and controlled by democracy. The funds being used in current Proposals are from mining rewards and not the 16.5M ELA. No one person can move any ELA from the 16.5M, including the Interim CRC until after the election.
In the Cyber Republic Constitution there is a section that clearly states the issue of Conflict of Interest. Kenneth K, CR Press Team leader, wrote an analysis on the topic of Conflict of Interest and to analyze if this Suggestion applies:
“In the CR Constitution, it has an entire section devoted to Conflict of Interest:
“It states clearly that the Constitution’s purpose here is to, ‘Minimize the possibility of conflicts arising between private interests and Elastos governance duties of Cyber Republic Council Members…publicly disclose their private interests; provide the Elastos community with a mechanism to lodge complaints against Cyber Republic Council Members in case of inadequate disclosures or clear conflicts of interest; provide the resolution of those conflicts by the Elastos Community should they arise.’
“A conflict of interest is: ‘…when he or she exercises an official power, duty or function that provides an opportunity to further their private interests or those of their relatives or friends or to improperly further another person’s private interests.’
“It is the responsibility of the Council Member to, ‘make reasonable efforts to arrange their private affairs in a manner that will prevent the Cyber Republic Council Member from being in a conflict of interest. Where conflict arise, every Cyber Republic Council Member has a duty to disclose their personal interest that may conflict with the interests of the Cyber Republic…’
“But disclose what, exactly?
“‘Other Blockchain projects that a Cyber Republic Council Member has an interest in; other forms of employment or business activities that Cyber Republic Council Members engage in; and any other forms of income that a Cyber Republic Council Member receives.’
“There is a burden for Council Members to disclose their personal interests, but in a community this new, there is no way that conflicts of interests won’t exist. That isn’t the problem. Every involved member of the community has taken on multiple hats, and we should not restrict that. Instead, transparency is the solution.
“In this particular case, Kevin has disclosed his roles in all projects, which is positive. However, aside from disclosure, it is in the other areas which may have been breached.
“‘No Cyber Republic Council Member shall make a decision or participate in making a decision related to the exercise of an official power, duty, or function if the Cyber Republic Council Member knows or reasonably should know that, in the making of the decision, he or she would be in a conflict of interest.’
“And, as if specific to this particular situation, ‘No Cyber Republic Council Member shall allow himself or herself to be influenced in the exercise of a Cyber Republic Council power, duty or function by plans for, or offers of employment…A Cyber Republic Council Member shall recuse himself or herself from any discussion, decision, debate or vote on any matter in respect of which he or she would be in a conflict of interest.’
“By pushing this into a Proposal, has he breached this part of the CR Constitution?
“Summarizing segments of the Constitution on Conflict of Interest further:
“There should be no preferential treatment to any individual or organization, they should not use their position to further their private interests with information that is not available to the public, and that the Cyber Republic Member should not use their position to influence a decision.
“The speed at which this was pushed, quicker than any other Suggestion, makes the bias frustratingly clear. Regardless of any internal discussion, be it months or years in advance, a Suggestion is supposed to be a community discussion and not a private one. So, was this pushed through too quickly? Does it represent a conflict of interest or not?
“Shouldn’t the Interim Council members who are voting to fund their own project realize that their leadership role makes the entire system appear corrupt with actions like these, and more time rather than less should be allowed for community discussion?”
Kenneth makes several valid points regarding the issues of Conflict of Interest. Was there preferential treatment for this suggestion turned proposal? Why did this become a Proposal so quickly (less than 24 hours from being a Suggestion)? Interim CR Council members who push their own projects through the CR Consensus could be deemed a conflict of interest as stated in the Constitution. Is this for the good of CR or one/all the CR Council members? These are important questions to answer in order to shed light on whether the Interim CRC works well for the decentralized budding ecosystem that is the CR.
The man behind the World Bank Suggestion turned Proposal was Interim Council Member was Kevin Zhang. He took the time to address some concerns of the community and CR Press regarding why this suggestion was passed so quickly:
“Someone asked me why this suggestion get proposed in only 24 hours, but other suggestion takes for days or weeks. Actually this idea is not new. It started a few months ago. I resigned as the Elastos US team leader position in March to devote more time to the early stage research of the World Bank Project. At that moment, this is just an idea, there is no solid technical solution yet. Of course, we should not propose something without technical validation. During this 2.5 months, I worked with the engineers of The World Bank Group and a professor of the GMU Cybersecurity Center, and we have found a technical solution to solve the World Bank’s problem. We also got another tech giant (sorry I cannot disclose its name due to NDA at this moment)’s support. So now we have four parties in this project. The technical solution is mature enough to propose and The World Bank would like to take the lead to develop a Proof of Concept to validate the technical idea. It takes about 3 months to get to this suggestion from Manhattan Project to CR. So this is not a 24 hours decision.”
Kevin Zhang’s conviction for The World Bank speaks volumes. He clearly believes that Elastos presents a firm technical solution to the World Bank’s problems which justifies this attractive proposal. He also explained that all the details of this project had taken months to devise. This proposal is a culmination of significant work. He is also the lone engineer for The World Bank project and he feels that there is a lot of potential with this partnership.
What did Kevin’s Interim Council Members think of the proposal? In short, the proposal was not passed. Here are the responses from the remaining two Interim Council Members that voted no:
Yipeng Su: “The main direction of development of the project and Elastos is not the same, and I personally do not agree with CR’s direct investment in some research projects, because it is too difficult to track and evaluate. But if the Manhattan Fund is willing to help CR do some investment management, I will support it.”
Feng Zhang: “The project is a long-term basic investment. The investment amount of a single project is relatively high, which is not suitable for direct investment by the cloud. Second, as I have previously proposed a similar ecological fund in the “Recommendations” section and in the forum, CR of such projects can be implemented through cooperation with relevant professional investment institutions, that is, let the corresponding professional investment institutions become the Yelaiyun Ecological Fund, and become the LPs or investors of the corresponding funds through CR, and on the other hand, make the CR-related investment become an investment interest. On the other hand, it also makes the rich resources of the relevant funds possible to feed back and come to the cloud ecology, which can be determined through specific investment agreements.”
Yipeng Su showed concerns of this proposal not being in line with the Elastos project itself. He also doesn’t believe in some of CR’s direct investment in some research projects based on them being too hard to track and to fully evaluate. He sees the value in the Manhattan Fund helping with investment management, which he will support. Feng Zhang believes the investment amount for this project is too high and relationships/partnerships with other investment firms and organizations can be facilitated through various funds.
Did the CRC make the right decision not passing this Proposal? Was this in fact a conflict of interest all along? Even if it was, should it have passed? While the idea of working with The World Bank is very exciting, all cards must be on the table at the Suggestion stage and the community needs to have all the information in order to make the best decision for the ecosystem.
With so much misstepping, did the CRC still work the way it was intended to work? Every single person in the community needs to dig deep and form opinions about the CRC and CR and speak up. The current Interim Council was not voted in, but rather was appointed by EF, so there is an aspect of centralization still. But given that CR was intended to be a community built on community consensus, how important was our voice here? Were we heard at all?
Was this a game between centralized leaders merely pretending to listen to the community’s voice? Or was it a thoughtful and potentially important partnership proposal for the future of the ecosystem?
Everybody wants a decentralized democratic system that is completely fair to all community members. If there are conflicts or power moves in CR, we have the right to speak up and challenge the authority with our points of view. Democracy is messy and it takes hard discussions and dialogue to settle our differences and come together as one.