Editing Block producer DAO (section)

== Variations ==
There are many improvements possible on every aspect of the basic outline given above. DGF provides an evolutionary structure which incentivizes the continual improvement of the system. This is necessary for any PoS consensus mechanism, given the inevitable threat of [[Transcendent values#Game theory argument|gaming]], any cooperative system leads to an arms race of attack and defense as the system becomes more successful and valuable. A system devoted to creating valuable currency, globally open to anonymous members, absolutely demands a properly balanced incentive mechanism against gaming.   

In this section we give an introduction to areas that will be continually improved.

=== Availability Smart Contract ===

==== Pseudonymous REP tied together without KYC ====
One important aspect of this implementation of DGF is that a block producer's REP can be tied together without exposing the owner of the wallet holding the REP. The REP used to run the automated block production client software grows automatically as they participate in block production and policing. The REP encumbered in the ASC can be tied to the REP gained by minting blocks when their ASC is selected. If it is ever necessary to slash a block producer's REP, then all of the REP they've used can be slashed without revealing the block producer's identity.

==== More stable selection ====
Improvements to the automated selection process can be made to select REP in a more equitable manner. The lottery process of selecting members according to power, statistically will maintain power ratios if all members are continually encumbering all their REP in ASCs. Larger wallets of REP will always remain larger if the owner continually runs the block production software, and the effect is linear (stochastic process argument). However, we can incentivize homogeneity between wallets if we implement a more complicated selection process of remembering which REP was selected: REP that has been selected for block production is not selected again until the entire list of active ASCs are selected. This encourages sock puppets, but that effect is mollified by tying together REP as in the previous subsection.  

=== Block producer selection ===
At Step 2 in the above process, the block producer is pseudo-randomly selected from the active Availability Smart Contracts. If this is not done carefully, a Byzantine actor who is the latest active block producer can anticipate the pseudo-randomness and manipulate the algorithm so that he is selected again, in perpetuity, which would destroy the decentralization of the blockchain. 

To guarantee the pseudo-random selection mechanism is resistant to such capture, there are several algorithms available. Here we describe a basic Commit-Reveal scheme, such as the [https://www.randao.org Randao] algorithm. Basically, selection of the block producer is done in two stages. First, every block producer sends an encrypted salt message for the pseudorandom algorithm to the current block producer to include in the current block. Then after the block is published, the block producers send in their keys to unencrypt their salt messages in the next block. The union of the salts is added to the pseudorandom number generator to determine the next block producer.

This creates complications for reasoning about what to do when the network is fragmented and some members fail to participate, or when a block producer censors commits or reveals. However, such issues can be policed and attacks disincentivized with [[Block producer DAO#Judicial|judicial governance]].