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==== Blockchain architecture ==== Consensus mechanisms for block production, such as Proof of Stake (PoS), are directly affected by the Transcendent Values Thesis. A PoS algorithm relies on a decentralized network of nodes to follow protocols and check that the other nodes are also following those protocols for constructing new blocks of data. However, there is always leeway in how a node produces a new block, which gives opportunities for corruption. For instance, the consensus mechanism exists to create a canonical view of the network, periodically. The issue is that there is no natural canonical view. Each node has a different perspective, for instance, on the issue of the chronology of messages in the gossip network. How does the network decide which transaction was uploaded first when two messages are sent to two different nodes within the latency period of communication between those nodes. Therefore, one of the functions of block production is to artificially create a canonical view of the gossip network, at successive periods in time. Censorship is also a major difficulty, where a block producer might choose to ignore certain messages and not include certain transactions in their new block. As a simple example, a block producer could arbitrage their network power by purchasing a stock for a lower price than was bid by a user that the block producer chooses to censor. Then the block producer can sell the stock to the bidder for the higher price, making a guaranteed personal profit at the expense of the market. In this situation, block production entails complicated rules for a repeated game. The Transcendent Values Thesis claims it is not possible to create an algorithm that will prevent every possible approach to subverting the intentions of the algorithm's designers to prevent [[Corruption|corrupt behavior]]. Therefore there is an inevitable arms race between the architects who must make ever more complicated algorithms, against potential or actual corruptors who will find ways to profit unfairly by gaming the system. The best way to escape this arms race is by giving the potential corruptors incentives to improve the algorithm rather than exploit it. For this, the blockchain platform needs a system of governance sophisticated enough to effectively reward such behavior and punish exploitation. This motivates DGF:
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