The Logical Next Step Towards Complete Decentralization of DeFiChain

Decentralization is often hailed as the holy grail for blockchain networks, ensuring that power and control are dispersed across a wide range of participants.

For DeFiChain, this vision is being pursued through an initiative by the DeFiChain Labs core engineering team with the introduction of Special Interest Groups (SIGs), which represents a strategic move towards a more community-driven and decentralized ecosystem.

This blog post explores how these SIGs will operate and the impact they will have on DeFiChain’s future.

Understanding the DeFiChain Ecosystem: The Four Layers

To appreciate the significance of SIGs and their role in DeFiChain’s evolution, it’s essential to first understand the ideological framework underpinning the DeFiChain blockchain:

1. Layer 0: This foundational layer provides the essential infrastructure that supports the entire DeFiChain network. It includes the multi-VM (Virtual Machine) architecture, which is crucial for consensus and supports applications running on the blockchain.
2. Layer 1: This layer encompasses the consensus mechanism and a suite of core decentralized finance (DeFi) components that are directly integrated into the blockchain. This includes the Decentralized Exchange (DEX), token systems, and basic oracle functionalities.
3. Layer 1.5: Serving as an intermediary, Layer 1.5 focuses on the economic dynamics of the chain. It includes advanced oracle systems, token economy management, and other critical components that support the growth and sustainability of the DeFiChain ecosystem.
4. Layer 2: Known as the MetaChain EVM layer (or DeFiChain EVM), Layer 2 is where developers have the freedom to create and deploy DeFi applications. Leveraging the Ethereum Virtual Machine (EVM), this layer provides a flexible and powerful environment for building and expanding DeFi services and products.

Each layer plays a pivotal role in maintaining the integrity and functionality of the DeFiChain ecosystem while also allowing for targeted innovation and efficient resource allocation. 

Historically, the community's responsibility has been limited to Layers 1.5 and 2. However, as DeFiChain progresses towards complete decentralization, the community will also begin to play a much more active role in the Layer 1 and Layer 1.5 development.

The Role of Special Interest Groups (SIGs)

The introduction of SIGs marks a critical turning point in DeFiChain’s journey towards decentralization. 

SIGs are essentially specialized factions within the DeFiChain ecosystem, each focusing on a specific aspect of the protocol's functionality.

These groups are empowered to make decisions and implement changes, particularly in areas that require ongoing management and refinement. Key areas that SIGs will manage include:

• Token Economy SIG: Determines which tokens are allowed as Decentralized Asset Tokens (DAT) and which should be deprecated. This SIG also manages DEX prices, vaults, and related components
• Oracle SIG: Responsible for timely updates and price feed availability for current and future DATs, ensuring that the price does not deviate significantly from the expected range.
• Explorer SIG: Oversees tools like Blockscout and Defiscan. Its operations are entirely self-contained and do not require on-chain decisions.
• Wallet SIG: Manages the Light Wallet app, its publishing, and maintenance. It also oversees the desktop wallet, which is optional and in maintenance mode.

How SIGs Will Operate

The operational structure of Special Interest Groups (SIGs) within DeFiChain introduces a clear separation between decision-making and execution.

While SIGs are empowered to make crucial decisions within their designated areas, they do not have the authority to execute those decisions on-chain.

Instead, execution powers are reserved for Governance members, a group within DeFiChain's hierarchy responsible solely for implementing decisions, without having influence over the content of those decisions.

The hierarchy is structured as follows:

• Foundation (Legacy)
• Governance
• Governance Members (Governors): These members hold on-chain execution powers but no decision-making abilities.
• SIGs: SIGs have decision-making powers but lack on-chain execution authority.

Each SIG operates independently, deciding its internal structure.

Whether a SIG chooses to have a lead or not, or how it manages appointments and resignations, is entirely up to the group.

These decisions are not dictated by higher authorities in DeFiChain but rather determined within each SIG’s governance.

Common Rules for SIGs

One of the key procedural elements for all SIGs is the concept of quorum— the number of participants required to validate decisions. Collectively, SIGs will define a universal policy outlining what constitutes quorum (M out of N members), ensuring consistency across the ecosystem.

Once quorum is reached, the SIG can tag an issue for execution by a Governance member on GitHub.

At this point, the Governance member’s role is purely administrative; they execute the decision without influencing or questioning the outcome.

Not all SIGs require on-chain execution. For example:

• DEX SIG: Responsible for managing decentralized exchange operations, this group will schedule its decisions for on-chain execution by Governance members after quorum is met.
• Explorer SIG: This SIG manages tools like Blockscout and Defiscan and operates independently, without the need for on-chain execution.

Implications for DeFiChain’s Future

The establishment of SIGs is a logical next step towards achieving full decentralization within the DeFiChain ecosystem.

By empowering the community to take on a more active role in development, DeFiChain is paving the way for a more resilient, innovative, and community-driven platform.

This move aligns with a broader trend in the blockchain industry, where decentralized decision-making is increasingly seen as essential for the long-term sustainability and security of networks.

For DeFiChain, the introduction of SIGs means faster and more diverse implementation of DeFi Improvement Proposals (DFIPs) and other crucial tech implementations.

It also reduces the reliance on DeFiChain Labs, allowing the community to drive the protocol's evolution. As community members take on more responsibility, the potential for creative solutions and improvements will likely increase, driving DeFiChain forward in its mission to provide decentralized financial services to all.

Final Words

In conclusion, the successful integration of SIGs will not only accelerate the pace of development but also solidify DeFiChain’s position as a leading platform in the DeFi space. 

While the path towards full decentralization is complex and requires careful coordination, the introduction of SIGs is undoubtedly a significant step in the right direction, bringing DeFiChain closer to realizing its vision of a fully decentralized, community-driven financial ecosystem.

The DeFiChain Labs team is committed to facilitating this transition, actively engaging with community members and groups to encourage their leadership and participation in the SIGs, ensuring a smooth shift to this new decentralized model.