Why it matters, and the PRüF protocol implementation of distributed governance
One of the things that we think about a lot here at PRüF is something called “business continuity.”
In general, business continuity is about having a plan to deal with difficult situations so that an organization can continue to function in adverse conditions with as little disruption as possible.
In asset tokenization, this means that tokenized assets will retain their functionality and value even if the issuing entity for the tokens fails, is sold, or suffers a catastrophic reorganization of priorities.
Under legacy tokenization protocols, there are few if any guarantees that a token issuer will remain in business, and assessing value for assets tokenized without such assurances is fraught with uncertainty about longevity and future value.
In most cases with legacy tokens, when the issuer fails to maintain the business infrastructure that offered the original value proposition for the token, the asset’s functionality will be degraded or completely evaporate.
At PRüF, we find that completely unacceptable. Therefore, we have designed the PRüF protocol to support on-chain storage, on-chain interfaces and applications, multi-chain transportability, and on-chain, contract-enforced business logic.
The PRüF asset tokenization protocol may seem like a complete solution since PRüF assets can maintain full functionality without any infrastructure apart from the blockchains themselves — but it is only one part of the puzzle.
The PRüF ecosystem includes adjustable parameters, user-established pricing, and a myriad of other features. Storage providers may come and go. Some blockchains may become insecure or vestigial. Bad actors may manage to subvert antifraud protocols. All of these cases require ecosystem management.
If PRüF were to remain as a corporate managed entity, this would represent a single point of failure. Admins would have global capabilities, and state or criminal coercion would pose an ongoing threat to asset security.
To counter these threats to the long-term health of the protocol and its stakeholders, we have implemented granular administrative protocols controllable by on-chain governance mechanisms — the PRüF DAO.
Under the PRüF DAO governance protocol, any token holder can submit a proposal to adjust parameters or undertake an administrative action.
Proposals, or “motions,” are formulated parametrically — defining precisely what parameters to change and what values to change them to in the symbolic language of the governance mechanism.
Once a motion is filed on-chain, it must be “seconded” by a quorum of nodes. Finally, it is up to the proposer to garnish support through social channels for their proposal. All of these actions incur transaction fees, reducing incentives for “spam.”
Once a motion has achieved the minimum (or a higher specified number) quorum for support within the specified number of epochs, the governance contract will then move the motion to a vote.
All nodes may participate in voting. However, the voting strength of a node depends on its staking numbers and revenue basis. This value is capped so that decentralization is maintained.
Stakers will have the opportunity to move their stake after the node votes but before vote counting so that ultimately the community has the last word. “Stake pulling” prevents a rogue node from effectively voting contrary to their stated position. (the contract will not count un-staked voting power)
Incentives for staking include earning a share of node revenue, although we also anticipate that non-revenue PAC nodes will also exist for purely political reasons. Because of the revenue provision for node voting strength, PAC nodes will be constrained in their voting power to favor revenue-producing nodes, at least in the early stages. In the future, the DAO (stakers and nodes) may decide to change this.
By implementing a DAO, PRüF secures the future of assets created using the protocol.
We feel strongly that substantive tokenized assets can only be achieved by carefully designing a protocol to preserve integral value propositions regardless of business outcomes or external circumstances. To achieve this, a protocol must include adaptive decentralized governance to deal with changing markets, technologies, and business conditions.
The PRüF DAO, with community-verified issuance and pure, blockchain agnostic infrastructure capabilities, offers integral and enduring value — making PRüF the best-in-class choice for trustable, durable asset provenance and management.
Only with PRüF can token issuers offer reasonable assurances to asset holders that their tokenized assets will still be viable into the foreseeable future and beyond.