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Futarchy based governance consideration to make xmrbazaar related decisions/changes

SoulReaver Verified Donor - Resistor
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Disclaimer: I made generous use of LLMs to gather my thoughts about this.

I saw a fair bit of contention about platform related decisions and policy changes, particularly regarding situations involving platform policies, trades, accounts, etc.

Futarchy is a form of governance proposed by economist Robin Hanson, in which elected officials define measures of national wellbeing, and prediction markets are used to determine which policies will have the most positive effect.[Wikipedia]

Here's a short comedic explainer of Futarcy governance:
https://xcancel.com/MetaDAOProject/status/1948822243896877403#m

A longer one geared more towards Aillia type math nerds:
https://www.youtube.com/watch?v=PRog7R37MA0

The basic idea is to let people bet XMR on which changes to the platform will actually improve vendor quality or trust, instead of just debating them.

How it could work:

Pick one main number to measure progress, like “average vendor rating over the last 30 days.” That’s the health score of the marketplace.

Users propose new platform policies or tweaks. Example ideas:

Shorter dispute windows

Lower or higher listing fees

New search or filtering options

Optional escrow features

Different badge display rules

For each proposal, the site opens a YES/NO market. People bet XMR on whether they think the change will raise the average rating.

The market runs for a week/month or so. If the YES price stays high (for example above 0.6 on a 0–1 scale), the platform adopts the change.

After a month, xmrbazaar checks whether average ratings actually improved. If they did, YES bettors win XMR from the NO side. If not, NO bettors win.

Example:
Someone proposes “show vendor badges more prominently on listings.” The market odds show strong belief it’ll help, so the change goes live. A month later, average vendor rating increases. The market resolves true, and YES bettors get paid.

This system means xmrbazaar evolves based on what users are confident enough to bet on, not on endless arguments. It’s community governance with real stakes behind it. Instead of endless forum fights about “what’s best,” you make people put XMR behind their opinions. If they’re right, they earn. If they’re wrong, they pay.
That pressure turns idle talk into actual knowledge. That turns xmrbazaar from a normal marketplace into a self improving economic organism, half prediction market, half democracy. xmrbazaar can potentially run futarchy today as a private XMR prediction market that influences its own policy. If it works, scale it up into the first privacy preserving governance by prediction system that doesn’t need a blockchain circus to function.

Possible problems with a futarchy style system on xmrbazaar and some arguments against it:

One BIG problem is figuring out whether a policy actually caused a change in the chosen metric. Even if the metric moves up or down, there are always other factors at play.

For example, suppose the platform adds a new vendor fee and the average rating improves. Was it because of the fee, or because a few bad vendors happened to leave that month, or because the overall user base changed, or because whatever? It’s hard to isolate the true cause.

Markets might bet as if every policy directly affects the metric, but in reality, most metrics move for many unrelated reasons. Ratings can shift because of seasonality, marketing pushes, new users, random noise, or even external trends like price swings in Monero.

That means when the market later pays out based on whether the metric went up or down, it’s rewarding people for guessing short term fluctuations, not for identifying the real impact of a policy. Over time, this weakens the link between the bets and genuine platform improvement.

Manipulation risk.
A trader could place a big bet on YES, then try to influence the results by faking ratings or running fake transactions to make the metric go up. If ratings can be gamed, markets can be gamed.

Short term thinking.
People bet for what helps next month, not what’s good six months later. It could push for quick boosts that hurt long term trust or liquidity.

Thin markets.
If only a few people trade, prices won’t reflect real beliefs. One big player could dominate every vote by throwing around a bit of XMR.

Conflicts of interest.
Big vendors might bet in ways that protect their current advantages, not what’s best for buyers or smaller sellers.

Oracle / data verification issues.
If a few people control how results are measured or reported, they can quietly bias the outcomes. Without good oversight, the system becomes a betting game with arbitrary results.

Governance inertia.
If no one trusts the data or believes the bets, the site ends up ignoring market outcomes anyway. Then it’s just an expensive poll.

Technical complexity.
Escrow, payouts, signature checks, and data tracking add maintenance load.

Community confusion.
Many users won’t understand how betting determines policies. They might assume it’s rigged or pointless, especially if a few early outcomes go against popular opinion.

Incentive misalignment.
Bettors and real users might not overlap. If outsiders trade more than actual vendors or buyers, the market reflects speculator sentiment instead of community insight.

Policy implementation lag.
Even if the market votes yes, coding or operational changes take time. By the time results are measured, conditions might have changed, making the data meaningless.

Moral hazard.
Someone might deliberately sabotage a policy after losing a bet, to make the opposite side win. In small communities, personal grudges can distort things.

“Garbage in, garbage out.”
If the metric doesn’t truly capture platform health, you’re optimizing for the wrong thing. Markets will just chase whatever looks measurable.

Futarchy based governance is a contentious topic, and my intention was just to introduce the concept. While there are good reasons to adopt this form of governance, there are also good reasons not to. I make no claims that this's a utopic, futuristic, best bulletproof governance system since sliced bread and we should adopt it. It's an interesting option w/ potential benefits though.
If you expect markets to reliably choose good social outcomes, you’re optimistic. Markets reveal information, not morals. The logic is that markets are good at aggregating information, while voting is good at defining values. So futarchy says: vote on values, bet on beliefs.

It’s a beautiful idea in theory and a logistical challenge in reality. Measurement bias, manipulation, insider information, ethical limits, basically all the reasons we don’t already let Wall Street run the Senate (officially).
Edited: Oct 6 18:11
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Douglas_Tuman Verified Donor
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Interesting idea. Tipped.

I have been thinking about how XmrBazaar could evolve to become a self governing platform and eventually a “network state”.

I like this concept. Like you said , accurately measuring success will be difficult. Maybe it would have to be a few measurements combined like rate of new orders, rate of new accounts, … etc.
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SoulReaver Verified Donor - Resistor
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Reply to post #402
Thnx!
This Solana based project is actively using it if you’d like to see some real life examples from them:

https://docs.metadao.fi/governance/overview

https://xcancel.com/MetaDAOProject

https://v1.metadao.fi/proposals

That's also where I heard the concept from.
Edited: Oct 6 17:29
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