I would like to respond to three interrelated issues here.
- Governance: Although some may not like it, at least here in the U.S., the SEC sees governance coins as a security based upon these laws. That means you have a stake in governance when you own LUNA. The governance documents (here and here) never state any separation in classes of ownership, therefore all LUNA owners are equal, based upon how much LUNA they own (again similar to stock). You can call LUNA what you like personally (if you want), but you need to know, if you are subject to U.S. jurisdiction, they will see it as a security.
- Some may try to wiggle out of this by saying that there is no legal structure to a DAO. Legally, even a non-person association, which use a trustee (who conducts businesses in the their own name on behalf of the association), can still be considered a legal entity (even if it is on the basis of a verbal contract). While there may be other legal arrangements for this community, one legal document states that this is a non-personhood community trust with trustees and an enforcer (which interestingly enough are not TerraForm Labs). Although this was done as part of a sports deal, it in turn legally outlined the community, and specified a trust where the governance community is the legal owner of certain intellectual property rights (this is apart from any other organizations that may support the governance community, or work on its behalf).
- Proof of Stake: Just like a company can issue stock, and the majority stock holders have the majority say (although all stock holders of specific ownership classes have some say in governance of the corporation), the only thing that is stated in the governance documents are that LUNA coins need to be staked in order to vote on proposals. It is assumed in the governance documents, in the links above, that staking would always be open to a person who owns LUNA for voting purposes. The whole idea of Proof of Stake is that the larger the stake, the more you have invested into the community, and the more you will protect it (rather than sabotage it). It makes no difference if LUNA was $100 or $0.0002 - either way a person with a lot of money could buy majority portions of LUNA (the buying power / dollar value of LUNA is irrelevant since it applies equally to all people). If others feel their stake is threatened, they can certainly purchase more (LUNA [LUNC] is still available on some exchanges, and has been since the collapse in price). The threat that someone may take over actually incentivizes both coalitions in regards to stake, as well as further purchases of the security (ie. LUNA [LUNC]). The whole idea of proof-of-stake attack sounded good, and maybe for a day or two I can see giving the community time to respond, but in reality, it actually posed no further threat than it did when LUNA was at $100 (the same threats in proof-of-stake could easily be just as exploited there as it can when the price moves down or up).
- Governance attack: This sounded good, and maybe for a few days could have been supported in terms of proof-of-stake surrounding the issue of governance while coalitions formed around stake in the community, and people were able to defend their stakes by purchasing more LUNA, but the real attack was:
- shutting off the staking that shut people who were not staked out of voting without providing another mechanism,
- doing it without a proposal that had passed by community vote,
- doing it days before a proposal and vote on major direction of the community,
- of having the LUNA Foundation Guard spend close to $1B to purchase LUNA for staking purposes (for the purpose of attempting to prevent a proof-of-stake attack),
- implementing a whitelisting feature, without community vote, hours before the official TerraForm Labs proposal 1623 was posted, and without clear communication or any real procedure for whitelisting. The comments that surrounded the discussion of whitelisting within the development community in my estimation showed that proposals were not necessarily being blocked solely due to “spam,” but some were blocked due to viewpoint (whether that was the personal choice of the reviewer, or from others in leadership in TerraForm Labs, I do not know).
- To be fair, they did eventually publish the whitelist procedure. I found one of their support to be helpful. I found that one developer commented to a verbal struggle that was happening around proposal 1273 say “this really sucks. Democracy is really a joke.”, and only after that comment was 1273 finally whitelisted (after it has specifically been denied by a previous TerraForm Labs developer as “intentional”). In one situation, surrounding proposal 1385, what one TerraForm Labs developer said, which sounded good at the time, was actually a little disingenuous on further investigation - thankfully a community developer frustratingly commented and pointed out the “bad faith”). TerraForm Labs did put a slider bar that allowed both the desktop and web wallets to finally see all proposals again (thankfully), although at that point proposal 1623 was only a few days away from closing, and it still gave a handful of proposals a clear visual advantage. In addition, the whitelisting procedure (which thankfully they eventually published) is less than intuitive for those who are not in the application development field (or at least are familiar with repositories such as git).
- The whitelisting feature blocked certain proposals from being voted on in the desktop wallet, and gave an advantage to those proposals that were whitelisted [disclosure, proposal 1597, which I worked on, was whitelisted for the last few days before voting ended on that proposal].
- The governance documents specifically document that a person is suppose to go to Terra Station > Governance > and Voting to vote on a proposal (not have to use a direct link, and a whitelisting feature that basically hid legitimate proposals).
I realize that the staff and support at TerraForm Labs have been very busy lately. However, whether it was intended or not, it is difficult at this point, to not recognize that these items above worked together to give an unfair and inappropriate advantage to the TerraForm Labs proposal, and worked to bypassed the community to maintain control in such a way that is legally inappropriate in a legal governance environment (even if that is not what they were intending). While I have tried to both be honest, while not disparaging the work of TerraForm Labs, I find myself being much more sympathetic, than I was at the start of this process, to those who have outright stated that the process that has shut off those who hold LUNA from participating in the voting process (whether pre-crash holders not staked, or post-crash holders not staked), and provided clear advantages to the TerraForm Labs proposal (and a handful of others that made it through the whitelisting process while other legitimate proposals did not), is the real governance attack.
I can understand from a business perspective that every leadership regime, and sometimes even those among the stockholders, would rather not see change - however, if they were willing to open the process to public funding, and building a community that would be tasked with broad governance, then they need to honor that process with integrity (even if they still attempt to protect their position). If that was not what they were intending, then they should have remained a private company.
Staking at this point should resume for the LUNC chain. I can see no legitimate reason for staking to remain suspended if this truly is a governance community.