Introducing the Kin Protocol: A New Era for Decentralized Governance of Kin

Decentralized Governance of the Kin Cryptocurrency

As a participant in the Kin community, I'd like to offer a disclaimer. This article is not an official statement from the now defunct centralized Kin Foundation or anybody that has any form of ownership over the intellectual property or business structure behind Kin. My opinions are my own. I have no affiliation with the foundation, its directors, nor its employees or previous employees. I have no privileged information.

¹

I am a TDE participant who has never sold their Kin and who cares about the ecosystem.

Many have been approaching the idea of decentralizing the Kin ecosystem with preconceived notions and limitations. Let us put it straight, there is no need for official accounts or channels to govern the Kin Ecosystem. In fact, decentralized community channels are more than enough to have effective governance. The presence of many Discords, GitHub discussions and other public forums for the Kin community are not an issue. Rather they are a testament to the diversity and resilience of the ecosystem. A prime example of this type of decentralized collaboration took place in the development of Ethereum 2.0. There was no “Ethereum Company” directing who’s supposed to do what and how it’s done, it was Vitalik and others at the forefront of creating the ideas. They created a vision and encouraged 3 separate companies; Prysmatic Labs, Sigma Prime, and Status to devise their own solutions in parallel. They and other individual contributors and teams helped write the changes that made it all happen. This is the essence of decentralization, and it is crucial to keep this in mind as we move forward with the Kin Ecosystem.

The Problem with Centralization

Centralized cryptocurrency foundations can have a number of issues that hinder the progress of the project. The founder or small group of individuals at the top of the foundation can have an outsized influence over the project's direction, and may make decisions that do not align with the community's desires or best interests. This can lead to a lack of innovation or progress, and may even lead to a loss of community trust in the project. Additionally, the centralized structure may make it difficult to effectively manage resources and ensure that they are being used in the most effective way. A decentralized governance system that utilizes on-chain voting can help to address many of these issues by allowing for a more democratic decision-making process and creating a more open and transparent system.

The Importance of Decentralized Governance for the Kin Ecosystem

For more than 5 years, the Kin Foundation had a chance to make Kin cryptocurrency more decentralized, but they came up well short of the mark. The Kin community has been searching for a solution that would bring about a more fair, accessible, and transparent digital economy. With the Kin Foundation out of the picture, the creation of a new decentralized governance system is crucial to determine how the Kin reserves can be spent and to ensure that the Kin cryptocurrency continues to thrive. Enter the Kin Protocol, a simple solution that takes inspiration from the trailblazing ideas of Vitalik Buterin, the co-founder of Ethereum.

Vitalik believed that decentralized governance is the key to unlocking the full potential of a cryptocurrency and aligning incentives in a way that benefits the entire community. The Kin Protocol takes this idea to heart and aims to empower the Kin community to make decisions that will shape the future of the digital economy. This is achieved through a decentralized stake weighted voting system, ensuring that those who are most invested in the success of the Kin cryptocurrency have a say in its future.

A decentralized governance system using smart contracts [SPL programs] is a more secure and transparent way to reach consensus among the community than using social media platforms like Twitter or Discord. Smart contracts are self-executing and immutable, meaning that once they are deployed, they cannot be altered or tampered with. This ensures that decisions made through the smart contract system are fair and unbiased, and cannot be influenced by individuals or centralized entities. Additionally, a smart contract-based governance system can offer a more direct and streamlined process for decision-making, allowing for faster implementation of community-driven proposals.

(Fig 1: Kin Protocol economy)

Enter Kin Protocol

The Kin Protocol is not the panacea to all kin's problems, but it is a step in the right direction towards decentralized governance. By utilizing skin-in-the-game and stake-weighted voting, it empowers the Kin community to make decisions that will shape the future of in-app digital economies. The protocol also creates incentives for participation by offering staking rewards from the Kin reserves, motivating users to vote on proposals and engage in the governance process. Likewise it also has disincentives as those who vote on malicious or destructive proposals that are executed will see their voting amount of Kin burned as a consequence. To get an idea of what a system like this could look like take a look at AAVE Safety Module

Staking

The staking will play a crucial role in bringing a decentralized model to reality. Initially, it will function as a stake-weighted voting system, allowing token holders to cast their votes based on the amount of Kin they hold. However, the staking module will soon evolve to incorporate governance, staking incentives, a slashing system, and a burn mechanism. These components will empower participants in the process by allowing them to make decisions such as what percentage of the stake can be forfeited, and how the burning mechanism and slashing will work. The staking module will be a key component in ensuring the decentralization and fairness of the Kin ecosystem, allowing the community to govern and make decisions that drive the future growth of the project.

Voting

Voting is an essential component of the proposed decentralized governance system using smart contracts. The system intends to time lock a portion of the tokens staked for a vote to ensure that they cannot be used for another vote until the time lock period has expired. This mechanism ensures that the voting process is fair and transparent and prevents vote manipulation or double voting. This time-lock feature would help to maintain the integrity of the voting process, allowing all participants to have a say in the decision-making process. It also helps control for whales repeatedly exerting their power over everyone because the tokens will become locked in their vote. With this approach, the Kin community can be confident that their voices are being heard and their decisions are being implemented in a democratic and effective manner.

Slashing

The slashing mechanism is a key component of the proposed staking and governance system. The way this typically works in decentralized finance (DeFi) protocols is that it is used to cover a shortfall event regarding liquidity causing a deficit. This could work the same way but pertaining to the Kin reserves. If a user is staking, then whatever they have staked could be subject to losing a percentage in a shortfall event. The governance process becomes responsible for maintaining solvency. How to solve the problem of the method to determining these events is not one I think is prudent to solve immediately, but I imagine it could be a novel oracle design that could align incentives in a way that achieves the desired result. For a similar concept check out Chainlink Proof of Reserves

Burning

The burning is the process by which a part of the staked tokens are destroyed and removed from circulation based on whether they voted for the destructive consequence. The aim of the burning is to discourage and penalize harmful actions by any participant in the system. By taking away a part or all of their voting stake, it serves as a punishment for negative behavior and helps maintain the stability of the overall system. Stakers could assign any amount up to the total amount they have staked, minus whatever is currently frozen in the voting process. This ensures that everyone plays by the rules and acts in the best interest of the community as a whole. The conditions for burning, as well as the extent to which tokens will burn, will be a community led decision through the governance process. Similar to the slashing, this could use an oracle system to determine success metrics or it could be a role delegation to certain community members via the vote as trusted arbiters of success criteria.

Governance process

Additionally, the process for submitting and evaluating proposals for the Kin ecosystem is crucial for ensuring the long-term success and decentralization of the platform. Having a structured and transparent proposal process helps to ensure that the community is able to make informed decisions and hear all voices. By having clear steps and a defined process, we can cut the potential for bias, manipulation, and prevent any one individual or group from having too much control over the direction of the project. This not only protects the integrity of the Kin ecosystem, but also builds trust and confidence in the platform among its users and stakeholders. In short, a well-defined proposal process is essential for the continued growth and decentralization of Kin.

(Fig 2: Governance process)

The steps to creating a proposal in the Kin ecosystem are as follows:

1. Creation of a Kin Improvement Proposal (KIP) - The first step in the proposal process is to draft the proposal in a markdown document on GitHub.

2. KIP Feedback - After the KIP creation, there will be a healthy discussion on the community forums, which could be on one or all the community Discords. In the future, this could be a DAPP using on-chain data and IPFS for storage could replace the centralized application. At the end of this phase the KIP will close all further modification.

3. Signal Collection - collect everyone's vote on the idea of the proposal as it is in the KIP.

4. Implementation - If the proposal gets approved by the community vote, the proposer will then need to figure out how to develop the proposal. Discussion with the community will take place.

5. Review and Final Vote - The community will vote on the completed code. I recommend that we later appoint trusted community engineers as reviewer roles who also play a part of this vetting. Their job is mostly to ensure it has all the requirements before heading down pike. These steps are intended to be automated later on. Any SPL program changes will also require a formal audit. This will be in a future KIP.

The Kin Protocol intends to be a low-level, agreeable solution that can solve for the basic problems of stake-weighted voting. But it is also designed as a building block for future updates, such as a DAO structure to manage Kin Reserves or the restructuring of the Kin Rewards Engine (KRE). In this way, the Kin Protocol represents a new era for the Kin cryptocurrency, one where the community has the power to shape its future and bring about a decentralized digital economy that works for everyone.

Tokenomics

The proposed system of enabling staking and burning tokens can have a positive effect on the supply and demand of Kin. By allowing decentralized finance (DeFi) users to stake Kin, it creates a demand for the token, driving up its value. Additionally, the burning of tokens as a penalty for malicious behavior can decrease the supply of Kin, which can also increase its value. This deflationary effect can help Kin maintain its value over time, making it a more desirable asset to hold. This will help curb KRE inflation. Overall, this proposed tokenomics model can be beneficial for Kin by increasing demand and decreasing supply, creating a more stable and valuable currency.

In addition to the benefits of enabling staking, there are other factors that highlight the importance of a decentralized governance system for the Kin cryptocurrency. In the past, the Kin Rewards Engine (KRE) was the primary method of distributing Kin to developers, but it had its flaws. The KRE's previous version, KRE3, used fake staking to artificially reduce sell pressure and increase buy demand. With the new staking system, the increased demand is generated by demand for staking rewards and governance power and not artificially created by shuffling kin via the KRE. Moreover, large apps that received Kin from the KRE in the past were known to immediately dump it to pay bills, leading to an excess of sell pressure on the market. With a decentralized governance system in place, the community can better manage the distribution of Kin and avoid such issues, creating a more stable and valuable ecosystem.

KRE

One of the problems with the current Kin Rewards Engine is that the largest apps tend to dominate the system and win most of the rewards. This has led to a lack of competition and innovation in the ecosystem. By implementing a voting system that time locks tokens, everyone can participate in governance and have a say in how the KRE is structured. Furthermore, this ensures that the largest holders cannot repeatedly rig the vote in their favor, as all the tokens used for a vote are locked for a certain period of time. This levels the playing field and promotes fairness, preventing any single entity from having too much influence over the Kin ecosystem.

First Steps

Early proof-of-concept iterations of the staking module would start as simple stake weighted voting. Afterwards we can update it to include staking incentives, then we would add formal governance functions such as update proxies of SPL programs and later slashing and burning will come. We need to start small so we can stand back up the KRE and employment of Kin reserves. As things pass the vote, there can be a roadmap help on GitHub.

On GitHub I created 2 sample KIPs, which I will refine in the upcoming days. The first is to propose an addition of incentives to the staking system. The second is to appoint Will Gikandi as the first reviewer. The reviewer role will be the stewards of the system in the short term. They will be tasked with making sure the code being submitted is in line with the original intent. They will be granted permission to the GitHub repositories.

At the end of the day, the implementation of this proposal system is up to the community. It does not need any complex solutions, but rather a simple SPL program, which I and many others in the community are capable of and willing to write. All code is iterative, start small with ambitious ideas and use that as a jump off point. The idea is to give back control of the Kin reserves to the community, rather than relying on one centralized figure or entity to manage it. This proposal system, if adopted and trusted by the community, could serve to manage the reserves as a decentralized entity. By learning to trust the proposal system as a governance apparatus, the community can also learn to trust it with the management of the reserves. It is a more empowering approach than relying on outside parties or appointing kings in the community to manage it for us.

Join the discussion on Github, submit a PR, submit a KIP, or tag @mocolicious#9242 in the Community Discord, KinShips or PumpkinLabs or don’t! The marketplace of ideas belongs to everyone. Everyone should go produce their own ideas and we’ll all put them out for discussion.

1. the name Kin is license and trademark of Kik interactive and the use of the name is only in reference to this proposal pertaining to the Kin token. The name can be changed but if the users of the Kin token choose to adopt it, it would be a tightly coupled component to the token itself, its monetary supply and how it functions.