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European University Institute - Robert Schuman Centre for Advanced Studies

The advent of blockchain constitutionalism?

Governance, decision-making processes and law and regulation were at the core of an event that took place at the beginning of June at the Robert Schuman Centre, aimed to explore blockchain systems through the lenses of legitimacy, polycentricity, and constitutionalism.

15 June 2023 | Event - Research

Photo of a session of the conference on blockchain constitutionalism

Blockchain networks and Decentralised Autonomous Organisations (DAOs) have witnessed a surge in adoption in recent years. In order to effectively fulfill their promise of widespread structural innovation and change, they require governance that is perceived as legitimate by both internal and external stakeholders. As permissionless, globe-spanning technologies with significant effects on the general public, there has been a growing interest in viewing these blockchain-based systems in constitutional terms.

Early analysis regarded the rules expressed through software code as a form of 'on-chain constitution', while more recently, these have been supplemented with written documents that articulate additional rules and principles regarding the governance of the blockchain-based system ('off-chain constitutions'). The common thread among the various examples of blockchain "constitutions" seems to be the definition of aspects of a system's decision-making process and making them relatively difficult to change. However, both blockchain practitioners and legal scholars do not agree on whether we should consider these as 'constitutions' or 'constitutionalisation' processes in a strict sense, nor to what extent these efforts can render blockchain systems more legitimate and polycentric.

For this reason, on 5 June 2023, 38 participants, including academics, lawyers, and practitioners, gathered at the RSC for a workshop addressing practical questions about blockchain and constitutions, legitimacy, and polycentricity. After introducing the theoretical, empirical, and practical work done on the topic by team members of the BlockchainGov ERC project, during the morning session, the organisers shared a mock draft constitution from a Decentralised Finance (DeFi) DAO with the participants. Split into four groups, the attendees engaged in a descriptive analysis of the interrelationship between on-chain and off-chain constitutions, how constitutionalisation may reinforce the legitimacy of blockchain systems, how the 'rule of code' and the 'rule of law' can be made more compatible, and how commonly agreed-upon social norms in blockchain-based systems can be established.

In the afternoon, each group presented concrete recommendations to better integrate on-chain and off-chain constitutions, improve the legitimacy of blockchain systems from within and beyond the community, and build a more cohesive and pluralistic decentralised governance.

The public conference took place on 6 and 7 June 2023, welcoming a larger group of over 60 attendees. Discussions revolved around three broad topics: governance, decision-making processes, and law and regulation, organised around six narrower discussion points: Blockchain network governance, decentralised application governance, constitutionalisation, 'exit to community', 'alegality', and the 'rule of code'.

Day 1 focused on blockchain practitioners, including members of apiary, DAOStar, DADA, EUCI, dOrg, Gitcoin, MakerDAO, NEAR, Other Internet, Paradigm, and Kleros, sharing their experiences and visions for blockchain constitutions and constitutionalism. Day 2 provided academics with an opportunity to share their insights on these subjects. The speakers included scholars on law, economics, media and communication, philosophy, and political science from the University of Amsterdam, University of Athens, CNRS, University of Colorado Boulder, EUI, University of Florence, Harvard University, King's College London, London School of Economics, University of Malta, University of Neuchâtel, National University of Singapore, and University of Surrey, RMIT, and University of Vienna.

Two key takeaways emerged from the multidisciplinary discussions. Firstly, on-chain constitutions are not sufficient to address the complex forms of coordination taking place within blockchain-based systems, as there are limits to what can be articulated in software code. Hence, there is a potential need for off-chain constitutions. Inspiration for these off-chain constitutions can be drawn from a wide body of scholarship, from societal constitutionalism to corporate governance. Secondly, although the process of formalising off-chain constitutions can enhance the legitimacy of blockchain governance, this is only the case if the constitutionalisation process itself is viewed as legitimate.

Read more on: In blockchain we trust(less): the future of distributed governance - BlockchainGov 

Last update: 15 June 2023

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