Internet Computer SNS: The Biggest DAO In Blockchain History

Introduction To Governance On The Internet Computer: NNS vs SNS

The Internet Computer is governed by an open permissionless governance system called the Network Nervous System (NNS). The NNS is commonly referred to as the “brains” in the network and it controls the Internet Computer blockchain.

The NNS manages the Internet Computer network’s governance, which includes neuron staking and proposals, it manages the ledge, which includes ICP token accounts and transactions, and it runs the registry of subnets and nodes.

However, there’s another blockchain governance innovation that the Internet Computer created and it’s called the Service Nervous System (SNS), which is the brains and the open governance system that controls a service or a specific DApp.

So you can think of the NNS as the President of the Internet Computer country, and the SNS as the CEO of the specific companies operating in the country. So there’s a relationship between the two as they both have governance powers in their respective domains.

In addition, the SNS is created and can be updated by the NNS — so the SNS is essentially an extension of the NNS, its code and upgrades are decided by the NNS community, it’s ready to use which means it doesn’t need developer effort, and its implementation provides for a de facto standard of governance — thus creating a more stable system for inter-DApp governance.

Currently, the SNS is being trialed, but the operation is planned to be launched by Q3 2022 where the Internet Computer will launch the first SNS and tokenize a first real-world DApp.

What Will The SNS Do?

The Internet Computer SNS will allow entrepreneurs and developers to create decentralized, tokenized governance systems for their DApps. Having a permissionless governance system and an open governance model is a powerful feature that will ensure that no single entity or centralized party will control a DApp and determine its future.

Below is a diagram for how the SNS will control a specific DApp and its architecture. On the left side are the users and the DApp developer, and on the right side are the SNS system and DApp itself.

So here we can see that the two users (yellow and orange) have an arrow that points to the DApp, this signifies them using the DApp, but there’s also an arrow for them and the DApp developer pointing to the SNS, which is how both actors (users and developers) can interact with the SNS to govern the DApp. This will make it so that a developer alone cannot dictate the future of the app or suddenly close its operations without consensus.

Moreover, this process happens through tokenization. Tokenization is really what the SNS provides to a DApp. It does this by allowing for the creation of specific SNS DApp tokens to govern that specific DApp.

However, this is all optional. For entrepreneurs and developers, when launching an app or a service on the Internet Computer they can choose and consider implementing an SNS for multiple reasons.

First, to attract resources that enable the DApp to have sufficient Cycles to run, develop additional features, and scale with demand. SNS also allows for token-based governance that can be used to attract users to the DApp and drive network effects that grow the community. SNS can also be used to attract investors.

For example, if a developer has an awesome idea for his app, he or she may want to attract buyers to purchase that specific app’s token, which through SNS is now possible. Doing this may provide growth opportunities for the developer as well as a solid investment choice for early adopters. It also gives these investors a say in the DApp’s future direction.

So essentially, having the SNS hits on all the Web3 principles that the Internet Computer is trying to achieve, such as greater decentralization, avoiding network and app stoppages, and greater app scaling.

In the end, the SNS implementation will look like the diagram below, with users and developers both involved in decision making, and with a proper governance mechanism through tokenization controlling the DApp.

Understanding SNS Through The DAO

So what the Internet Computer is working on in its roadmap is DAO-controlled canisters, in other words the SNS. The SNS will be a DAO-controlled canister that can control updates to the canister logic as well as issuing privileged commands to be carried out by the canister. So it’s essentially DApp governance through smart contracts. This will be a fantastic development in the innovative use of DAOs, especially at a time where DAOs have lost their steam because of the current market climate. But this is where the Internet Computer stands out, it doesn’t rely on hype and trends, it already has implementation plans for DAOs to fit into the network’s overall goals of allowing greater decentralization through SNS in-DApp governance.

Conclusion

Taken together, the NNS and SNS will allow for a better overall governance system for the Internet Computer blockchain as well as specific services and DApps being created on the network. It will also jumpstart a new wave of decentralization and provide startups with more incentives and opportunities to grow and scale.