Fluid Democratia – decentralized society

Abstract

Fluid Democratia is a fully integrated decentralized socio/economic system based on a decentralized ledger. It incorporates a new currency, universal income, P2P lending, currency exchange, Land registry, liquid democratic resources, and infrastructure management. The purpose is to create a parallel system to the current hierarchical organizational structure. The aim is true freedom with sustainable prosperity.

Unlike other distributed platforms, all users will be identified to ensure only one universal payment per person. This identification information is encrypted, therefore, anonymity is maintained while eliminating multiple free payments to the same person. To be a node, members of the node must be identified which makes the system a universal permissioned system.

Scalability is achieved by identification, random selection of an ever-changing (dynamic) shard, and a BFT (Byzantine fault Tolerant) consensus.

The aim is to enable all the things businesses, individuals, and governments currently do in a centralized top-down manner to be done in a peer-to-peer, decentralized, non-bureaucratic way. Each financial action will support a universal income fueling the system.

The platform will encompass many interlinked ledgers, the identification ledger, the transaction system, smart contract, exchange (on off-ramp), land ownership, resource management, and others.

Overview:

Real people input requests and verify actual events and situations in the real world (users and oracles).

They input this information into a GUI (Graphical User Interface) which sends messages to various decentralized nodes (and splits one instruction into many messages (ledgers/blockchains/DAGs/Databases).

The non-grouped nodes (different ledgers) communicate with each other through a shared Interledger protocol (language) which each node can translate to and from. A signature in the shared protocol is recognized by all, so each message from a nested node (node with the Interledger protocol) is known to be verified.

The universal inter-ledger protocol with the signature allows cross-ledger communication and the GUI enables anyone to be an oracle to verify data against the real world.

Ledger Framework

The system will start with three ledgers (or decentralized data storage and verification systems) the identity ledger, the liquid democracy ledger, and the transaction ledger. The nodes for each ledger can communicate through a shared Interledger protocol which all new ledgers will also use.

After that, we will add the Land registry ledger, smart contracts ledger, markets ledger, exchange ledger (coins and currencies), and natural resources. Others can be added at a later date and existing platforms (such as Ethereum, Eos, IOTA, etc.) may also be connected using the interledger protocol.

The ledgers get information and instruction from the real world via a GUI (Graphical User Interface) which also enables any citizen to become an Oracle – someone who verifies a real-world condition as true or false. Such as is Sebastian still alive? Or did Trump win the election?

Consensus

The ledgers are essentially permissioned because each node must have a private and public key (be a citizen) and therefore be identified, then a randomly selected group of available nodes (shard) will reach a consensus using a Byzantine Fault Tolerant (BFT) algorithm.

The identity leger can use the same method as it grows from the developers. The first nodes will be run by the builders, and they will identify new people/nodes, and therefore, the identity ledger is the first to run and does the base security for the other ledgers.

A shard of 50 nodes is used for verification and consensus. New nodes are swapped in and out of the shard updating their ledger when they are selected. The same randomizing method based on the private key is used to select the swaps.

Because there is no PoW, the amount of computing power required is low so most people who have a verified account (citizen) could run a node at some time.

Coins

Four coins:

FDC (Fluid Democratia Coin) which is used for everyday transactions, fully exchangeable.

FDS (Fluid Democratia Sump) is a temporary coin for the running of the sump (real-time money supply regulator) and regulating the payment. This is non-transferable and non-tradeable.

FBC (Fluid Build Coin) A coin created on an existing platform (most likely Ethereum ERC20) paid to the builders of the platform and 1 for 1 exchangeable for FDI coins.

FDI (Fluid Demo Invest) Which is the investment vehicle. Receives income from newly created FDC for a limited period of time – 10 years post 1 million members.

Interledger (Interoperability) Protocol

Each node will have a translator which converts messages from their ledger into a shared language. Part of the library for this language will be prefixes for each ledger in the “nest” so they know where to send the message. Therefore each message will contain this prefix or address.

A set of standard operations will also need to be included in this language the storage of which can also be done on a nested ledger to ensure security.

Nothing like this currently exists, so it will need to be created.

GUI

The user interface must be integrated from the start and run on current phones and computers, preferably a simple text version should also be available so people with old phones can at least make transactions and receive the universal income.

The GUI splits messages so that one simple command can send instructions to many ledgers; it also adds the prefixes for each ledger.

An active GUI can also receive instructions from ledgers and act on them independently as an Oracle pulling information from other sources and sending confirmations (or not) back to the ledger network.

Some of the interoperability of the network is actually achieved through the GUI via real people.

Flow Siphon Flat Payment (Universal Income and Money Supply Control) (Transactions ledger – Fluid)

• Starting money = 75,000 FDC
• Maximum FP (Universal income) 50,000 FDC per annum
• Money burnt = 10% of each transaction – excluding lending and forex (foreign exchange) which has a fee of 1% burnt.

Each person is given 75,000 FDC when their identification is verified. Ten percent (10%) of each transaction in FDC is destroyed and the equivalent is created in FDS and accounted for within the ledger. This tracks the amount destroyed. Each day, the total FDS is divided by the total confirmed users, and an FP (Flat Payment or Universal Income) is made to each user for the equivalent in newly created FDC; the FDS is destroyed.

The maximum daily payment is 136.89 FDC (50,000/365.25). If no transactions are made, no FDC is destroyed, and no payment is made unless there is a surplus in the sump. If more than enough transactions are made to make the maximum payment, the FDS increases and can be used to make the full payment on future days when not enough transactions are made. This acts as a real-time money supply regulator controlling inflation and deflation.

Market Place (Market Ledger)

This receives messages of all buy and sell requests from the “Contracts Ledger” and the GUI (people) that require acceptance (a buyer) before they can be fulfilled.

It lists offers and then delists them when the transaction has settled. Everything from house sales to loan offers and coins/currency offers can be listed here. Both buy and sell.

Having it on a verifiable ledger ensures only legitimate (existing) items, people, and contracts are for sale, and that they have a contract and associated real-world verification Oracle and arbitration mechanism in place before being listed.

Note: the oracle and arbitration system replaces civil courts and regulations.

Many different GUI’s may access the market data and repackage as need be.

Lending (Smart Contracts Ledger)

An embedded Dapp will enable any person to create debt vehicles (attached to tokens) which can be bought and sold on the Markets ledger and Forex ledger. Multiple trades will be cheaper through the Forex ledger as they will only attract the 1% siphon.

The Dapp will help create a simple loan contract, setting interest, repayment period, and actions on default, including the nomination of an arbiter to resolve disputes.

This does not restrict others from creating their own Dapps.

The transfer of FDC for a financial instrument (within the Dapp contract) will only attract a 1% destruction of the coin. If financial instrument tokens are swapped or transferred for each other (or become a pseudo currency*), they will need to provide 1% of the FDC equivalent (at current market rates) to be destroyed.

*Debt instruments as pseudo currency: If debt coins are exchanged for real goods or services, a fee of 10% of the equivalent FDC must be provided within the contract to be destroyed. To police this, a smart contract cannot be executed without a message to the transaction ledger as one side of the transaction. If not a third parallel transaction must be created.

Exchange (Forex Ledger)

The purpose of the exchange is to allow instant or near-instant transfer from FDC to fiat currencies to allow people to use the FP universal payment with the current tap-and-go payment network. This will encourage quick adoption.

Cloning an existing open source currency exchange such as Stellar or XRP with a modification to allow any organization to be a counterparty and hold funds.

As stated before, a 1% fee in FDC will be burnt for each exchange which will create a demand for FDC. The counterparties may have their own fee on top.

As well as this fast but not trustless system of exchange, we will also have a truly P2P system.

Bisque is a peer-to-peer exchange network that is open source, and although created for Bitcoin, we can adapt this software and make it available to the users of the Fluid Democratia. Bisque software sits on the user’s device, not the ledger.

Liquid Democracy (Voting Ledger)

Liquid democracy gives all people a vote that they can proxy to trusted others. A liquid democracy is required to make decisions on the maintenance of the system, and decisions on payment of those maintaining it. This includes some support services.

It will also be used to select managers of natural resources. It can be included in smart contracts to democratize infrastructure management.

Identity (ID Ledger)

Each real person must only receive one universal payment (FP), and each node must be identified. Therefore, we must ensure there is only one private key per person. This identified and verified person we will call a citizen.

This does not preclude the creation of non-citizen private keys to allow discrete transactions, however, to prevent a denial of service attack a fee of 100 FDC must be paid before messages can be sent from non-citizen keys.

To identify people, we will email one of three parts of the private key to the user’s email address, text one of three to the user’s phone number, and post one of three parts by normal mail to a real residential address – no post office boxes. The residential address will be confirmed by using the location services on the user’s phone.

When you have all three parts, you will create the account from your home with location settings on. If the location does not match the address, part three was sent to the account was invalid.

Question: “Are you at home” = yes <location checked against residential address given>

All three parts together will make the complete key.

A difficulty arises if more than one person lives at an address, which is usual. When the first account from an address is activated a photo, and fingerprint are also captured. The subsequent accounts at that address cannot match those biometrics.

Then a password is created for access and the usual using reCAPTCHA or similar to prove you are a real person.

For those without a residential address, a web of trust will be used to prove their identity. Trusted notaries could be another option.

Contracts (Smart Contracts Ledger)

The smart contract ledger sends automated messages to other ledgers and contracts to enact complex transactions. Everything from loan agreements, buying a house, or the use of public infrastructure. It is the major user of the interledger protocol.

Contracts will require an oracle or custom executor to pull/push https://medium.com/aigang-network/how-ethereum-contract-can-communicate-with-external-data-source-2e32616ea180 external data to verify if the conditions have been fulfilled in the real world.

Infrastructure

Using contracts, we’ll pull together many people to pool money to build infrastructure. A liquid democracy is used to vote for a management/negotiation team.

Oracles (GUI)

Parties to a contract must put up a stake. If they don’t agree (on the outcome of external conditions, i.e.: car keys being delivered), it will be referred to their agreed Oracle; three must be selected in order in case the first is not available. If they still don’t agree, it goes to random oracles.

The oracles get the stake. Five random oracles must agree and they split the stake. They are rated on their ability to give correct – agree with others – answers. This rating will help people choose their preferred Oracle/s.

If still there is disagreement, the dispute is referred to the arbiter who should provide their services on a voluntary basis. There is room within the Fluid Democratia to pay arbiters if the liquid democracy decides such.

Death and Cessation of Accounts.

All accounts will need to select what will happen to their money/debts/assets/land at death and or the cessation of their account, and how this will be determined. An external oracle will need to be set up to determine death. This is essentially writing a will on the creation of the account.

If the oracle disappears before the user does, a backup system will be in place to decide death and or cessation. This will be determined by liquid democratic vote to decide a worthy oracle and supported by funds from the sump.

People must use a third-party oracle, not one they are a part of. Or they can put a time limit on their account, so it will close within say 100 years.

Land (Land Ledger)

Another ledger will be used to store land ownership and category (what the land can be used for; residential, industrial, parks, wild, etc.)

There is a land rent tax on the land, not the infrastructure which is burnt and the sump increased. The tax is paid periodically pro rata: land value divided by the lease period.

The ledger will need to store the following:

• 3+ point longitude/latitude reference point for land area.
• Proprietor
• Encumbrances
• Lease period
• Land category
• Valuation (split between land and building)
• Price

It will need to:

• Prove original title from existing land registries. An oracle to check ownership is the simplest method.
• Confirm dimensions. Hopefully, we can do this with GPS, but it may not be accurate enough, surveyors and an Oracle may be necessary.
• Transfer ownership
• Register charge/mortgage
• Change dimension, subdivide/consolidate.
• Land tax siphon
• Categorize land type, cultural, mining, farming, residential, mixed, uncut, wild, common, etc. – Random committee to review applications for recategorizing. How applications are sent, criteria, and review of criteria, liquid democracy. And review of the lease period.
• Valuation system for land improvements split. Calculation and prompt for the land tax. Similar to the forex siphon.
• Roads, pipes, wires easements etc.

Natural Resources (NR Ledger)

We can only control the price and output of those resources owned or voluntarily put under the control of the demokratia.

We can tabulate how much of each resource there is on the ledger and allocate it to extractors (miners, farmers, and fishers) manufacturers, and distributors (many will be collective infrastructure contracts). The management teams for these resources will select the extractors and distributors and will be elected by liquid democracy. The price will also be set by liquid democracy and this wholesale price burned. Wages for the management team will be set by liquid democracy and paid from newly created coins.

The wholesale price can be used to control the supply of rare or dangerous resources.

There are some areas that are very difficult to manage under this system such as the common oceans, rivers, etc.

We can have a framework in place so people can choose to abide by the demokratia pricing and limits and an opt-in checking/regulatory system which may include payments/subsidies for abiding by the regulations.

Example: A fisher catches tuna from the ocean and ensures they only take 50 per year and they are all mature males (assuming this is the current agreed regulation). An independent oracle confirms the validity of this, and the fisher receives an extra payment for complying with the regulations. They can also state on the sale of the tuna that they have complied with, and therefore, hope for a higher price on sale.

An elected committee will come up with the regulations and put it to the liquid democracy for approval. Any interested party can propose amendments.

Residential land lease owners can use the resources from their land down to a level of 10 meters (excluding mining) but including rainfall, soil nutrients, and trees. Other land use types may have different restrictions.

Build and Maintenance – DAO

A Decentralised Autonomous Organisation (DAO) will build and maintain the system. A Build coin (FBC) will be created on Ethereum (ERC20) and issued to those who contribute to the build. This can be coordinated through GitHub and some new user interfaces being created by Aragon and Autark https://blog.autark.xyz/.

Two hundred million construction coins will be created and stored in a wallet controlled by a liquid democracy of builders. All builders can vote on the fee for each task and the completion and then payment of each task. Members will be identified by the GitHub handle, and Ethereum wallet provided to the group.

A core group of 10 – 20 developers will also receive a monthly payment to ensure there are some people pushing the project along.

Construction coins can be sold for other currencies which is a way for investors to get access to the system. On completion of the Fluid Lender and exchange, the Constructions coins are transferable for the investment Coin 1 for 1. As you can see, investors are paying the builders directly. Some construction coins could also be sold for hardware if required.

Maintenance will be paid for in the newly created FDC and decided upon by the liquid democracy.

Note: Only citizens or associations with at least one citizen can own land, receive the Flat Payment, be a node, be an Oracle, be an arbiter, and be a notary. Non-citizens can borrow and lend money if someone will accept it.

Investors

Ten percent of the burnt FDC will be paid to the investors pro rata per coin for a limited period of 10 years after the 1 millionth citizen is created. So essentially, for this period, 9% of the siphon is paid as a universal income, and 1% is paid to investors, on top of the universal payment. The FDI attracts newly created FDC.

Future

This should enable full P2P (peer-to-peer) sales with all segments of the chain being micro-paid at the time of the final sale. Diminishing the need for long-term trade credit. When you buy the electric bike, the seller is paid 10% of the price, the aluminum smelter 15%, the miner 10%, the designer 15%, the wheel maker 5%, the delivery person 10%, etc., etc…

This also means there is a trail of funding post effort which means we may have more income in our old age when less able as we accumulate effort into the economy.

David J Campbell 25 Aug 2019