Assessing Decentralization: How the Internet Computer Stacks Up Against Regulatory Guidelines

General
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The paper outlines several guidelines to consider an asset to be truly decentralized. These guidelines are divided into two main categories: technical decentralization and decentralized governance.
MICA Paper

  1. Technical Decentralization:

    • Self-executing Smart Contracts: The activity must be carried out using self-executing smart contracts that are autonomous and perform actions without human intervention.
    • Autonomy of Smart Contracts: Smart contracts should not have built-in editing accesses that allow any party to control significant inputs of the smart contracts.
    • Absence of Immutable Rights: There should be no inherent rights embedded in the smart contracts that link them to specific legal entities.

  2. Decentralized Governance:

    • Absence of Legal Entities: There should be no identifiable legal entity that can be held responsible for the activity. The governance should be carried out through decentralized mechanisms such as DAOs.
    • Distribution of Decision-Making Power: Decision-making powers should be distributed among multiple independent parties, not concentrated in a single legal entity or small group.
    • No Centralized Control Over Access Mechanisms: Access to the system should not be controlled by a single entity. This includes control over network nodes and smart contract deployment.

Does the Internet Computer Meet These Criteria?

The Internet Computer (ICP) aims to provide a decentralized platform for building and running applications. Here’s an assessment based on the guidelines mentioned:

  1. Technical Decentralization:

    • Self-executing Smart Contracts: The Internet Computer uses canisters, which are smart contract-like software modules that run autonomously on the network.
    • Autonomy of Smart Contracts: Canisters on the Internet Computer can perform actions autonomously, but the network governance and certain functionalities can be influenced by the Network Nervous System (NNS), which introduces some level of centralization.
    • Absence of Immutable Rights: The governance model of ICP involves the NNS, which has certain control mechanisms that may not fully align with the absence of immutable rights as described.

  2. Decentralized Governance:

    • Absence of Legal Entities: The Internet Computer is governed by the NNS, which is a decentralized governance system. However, DFINITY Foundation plays a significant role, which may introduce elements of centralized control.
    • Distribution of Decision-Making Power: The NNS allows token holders to vote on proposals, distributing decision-making power. However, the influence of the DFINITY Foundation and larger stakeholders can affect the degree of decentralization.
    • No Centralized Control Over Access Mechanisms: The network aims to be decentralized, but the NNS controls significant aspects of the network, which could be seen as a form of centralized control.

In conclusion, while the Internet Computer has several features that align with the principles of decentralization, there are aspects related to its governance and control mechanisms that may not fully meet the strictest criteria of decentralization as outlined in the guidelines.

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I used CHATGPT to analyze the paper and Make an assessment of, from what it knows about ICP, whether the internet computer meets the criteria from the paper.

Do you think the internet computer needs to hold a criteria according to MICA regulations coming up later this year? AI is often not correct so as the output is based on the training data. Still I think it’s a good start.
For context here’s the prompt: According to this paper, what are the guidelines to consider an asset to be truly decentralized, and does the Internet Computer, from what you know about it, meet the criteria from the guidelines?