Nifty Llama

Upland - How to balance true ownership and compliance

By recourier | Upland Uncovered | 13 Jul 2020

If you have read any of my other writing you should know by now that I am a believer in blockchain and it's ability to level the playing field.  From banking the unbanked, to providing paths of ownership without red tape, to privacy on the blockchain if you desire, censorship resistance, all the way up to breaking the deathgrip of the rich and powerful over the less fortunate masses.  I believe strongly in the power of an open, public, immutable ledger.  I also believe very strongly in the old crypto moniker of 'not your keys, not your coins'.  I think that Upland can play a pivotal role in the world in this regard, hence my immense interest.

I wrote a fairly lengthy piece on how Upland can provide a path to mass adoption. The way to do this is by making the path to crypto as friction-less as possible.  To do this you often have to make some concessions on the technical and security aspects.  Upland is trying to do the right thing here but is dealing with two fairly opposed viewpoints.  There are some that see it as a game, and anything to make the game more fun, or competitive, or game like is all in good fun.  For others it represents something much more powerful, it represents bringing a fair and balanced second world experience to the masses with true ownership through blockchain.  Though I did come to the game through the former, I am staying and promoting it very much because of the latter....while still trying to have a good time.

This discussion came to a head in the Upland Official Discord channel this week.  There were some discussions on over centralization, NFT ownership and secondary market censorship.  There was a concern that there would not be true ownership of NFTs and that game devs could block people from their property by not allowing them to manage NFTs outside of the game interface.  The game devs promised increasing decentralization over time in what they have called their Upland White LLama Paper which has this to say in the section called Centrlization vs Decentralization:


Upland continuously strives to optimize the monetary policy so the overall cost for its economy
will be minimized. In general, there will be a mix of centralized and decentralized decision making.
There are strong arguments to start out with a more centralized monetary policy – including game
design decisions - as long as the economy is in its infancy state, to cope with a variety of aspects:
In the beginning there are yet too many unknowns how players will behave, how local and
regional markets influence overall UPX demand, what impact collections have to property prices,
and many other (market) factors. Also, unforeseen activities of a small number of participants who
are trying to “trick the system” can have large impacts in the early days of the game and destabilize
the whole economy.

In the long term, once there is a critical mass of Uplanders, less opportunities to trick the system
and the economy is perceived to be stable enough, more decisions and responsibilities shall be
transferred to the community via on-chain governance. The latter might be combined with the
delegation of some decisions to skilled representatives of an independent foundation.


The plan is to delegate authority to actual neighborhoods and cities and allow them to establish their own governance models.  In a way this will make individual municipalities operate in a way as a DAO. But, to do this effectively, they need to find a way to use the ledger to address governance.  This is going to be a tricky ask to do within a game.  The other option is to not oversee it at all and let the governance build itself inside the game or out. 

There are some that consider the growing governance model outside the game that's taking shape to feel a bit exclusive.  Their point is that there are governance discussions, as well as NFT market making, happening in a privately owned server to which many, but not all, players have been granted access.  Supporters opine that nothing on the server is serious or binding and it's just people having a bit of fun.  Being that it's private then it's up to the operators who can be in it and who can not.  Opponents feel that being excluded means that relevant data is being made unavailable to them and limits their success in the game.  They make the point that exactly that success can have real world implications on the value that can be built or traded on their NFTs.  They feel that being blacklisted by the wrong crowd can put you in bad shape.  Both sides have made their position public.  Being that it's not a formal part of the game Upland has no influence over what's happening.

What Upland has said is that there will, in the future, be homes within the game for this type of discussion.  There will be cafes, neighborhood gathering places, and some sort of in game communication models.  These will, at least to a degree, have an influence by the neighborhoods to design and build these public areas as they see fit.  Will this resolve the concerns of both parties?  Will it bring these types of governance into the game?  I don't know, only time will tell.  But as we can see in governance across the globe, governing of peoples and places both big and small can be filled with a bit of turmoil from time to time.

Another discussion at hand was one of NFT ownership.  Several people noted their concerns over using the term "true ownership" in the White Llama Paper without granting access to private keys and direct on chain access to NFTs. 


Upland, so the vision of its founders, will be one day a self sufficient and thriving economy derived
from “True Ownership” where creativity and business sense create new opportunities one cannot
imagine today


Without granting direct on chain access people feel it's not appropriate to use a term like 'true ownership'.  From all appearances the game operators are in between a rock and a hard place.  Their message is one of independent ownership and using the power of blockchain, while also making blockchain accessible to the masses be removing the friction and pain points to onboarding new users to the "blockchain lifestyle".  While trying to please all parties they are also attempting to appease real world governing bodies and attempt to steer clear of all the slings and arrows of AML laws.  It seems that they are trying their best to do the right thing by their players while respecting laws and retaining compliance.  They mention attempting to find a way to provide direct access to NFTs, but by allowing ownership and transfer outside of the game it opens up significant compliance issues.  One of the co-founders, Idan Zuckerman, had this to say on their Discord.


Looks like we have a misinformation and FUD party going on.
Let me make everything 100% clear, and similar to everything we’ve communicated from the very first day.  
1. Upland was designed to enable players to extract monetary value back to the real world in fiat. Why fiat? Because that will enable Upland to have millions of participants, and not 20,000 wallet holders that we have today in the crypto gaming space.  
2. AS OF TODAY, in order to achieve this AND operate legally in the US market, we can’t allow a situation where someone buys UPX with fiat, then buys and NFT, and then blindly takes it out for trading outside of our marketplace. Why? because then a terrorist organization (e.g.) can use Upland as a platform to launder money (among other regulatory issues)  
3. Does that mean NFTs will never be allowed to be taken out? No! Even today, we are working on the path that would allow Uplanders to take their NFTs outside in a manner that maintains regulatory compliance. Why haven’t we officially announced yet? Because we don't announce things for which we don’t have the 100% solution in mind just yet. But the end game is clear - empower Uplanders with true ownership of all digital assets.  
4. Does Upland have control over the players’ digital assets? NO! We don’t have access to the players’ private keys. These are managed by our smart client and never communicated to the back end of Upland. Why are we doing it this way? Because again, 99% of the potential players who will take part in the game don’t want to manage their private keys, and are happy to let innovative technology do that for them.  
5. Will Uplander be able to still generate their own private keys for NFT access? YES! We’ve communicated this numerous times in the past, and this is found on our roadmap that was published earlier this year
Is this the most ideal setup we can imagine for the future? Of course not. But it is the most ideal setup that we have identified that can be implemented RIGHT NOW. The up side? Instead of trading your NFTs with the same 20,000 players - you now have access to a potentially unlimited market of participants. Anyone who wishes to have a constructive and respectful discussion about this is more than welcome to here.


When asked by other posters to clarify statements on the private keys, he gave this as further information.  


There's a distinction between an operator that manages your private keys behind the scenes (similar to how we manage visitor accounts), and what we do for Uplanders. At the point when a visitor graduates to Uplander status - a dedicated EOS account is created (for which the PK is created on the client side) and at that point, we as game operators can’t access the player’s digital assets without their explicit permission. So unlike the other games you had in mind that 'solved our problems' we offer a solution that allows seamless, cross-platform key management but such that maintains the PKs secret from the game operator. The only reason a player may want to generate a PK outside of the Upland game client to access the dedicated EOS account, is if they dont trust the smart client to do what its supposed to do. We have done audits in the past (for our smart contracts), and have plans to do them in the future. The big problem is that we are an agile shop and auditing every single release is a big overhead. We will look into ways for auditing the specific components of the smart client that deal with signing blockchain transactions. You are correct with your assumption that generating your own PKs (on its own) will not enable you to take the assets out freely. The ecosystem works exactly the same whether your PKs are managed by the smart client, or by you using an external wallet. Hope that answers your question.


I can't speak for everyone, but they do seem to be addressing the problem head on and have plans to provide access in different and more direct ways in the future.  But, as some may say, promises...promises.  For the time being I think they have earned the benefit of the doubt as the message quoted above appears to be consistent with their actions to date as well as their published documentation and roadmaps.    

I believe that it's fair for players to question this and hold them accountable, but it also should be done in a respectful way that is aimed at generating meaningful dialog.  Public discourse, sometimes even heated, is a cornerstone to a democratic society.  I believe that this is in alignment with the game operators goals, but I will admit I can sometimes see through rose colored glasses.  At this point I believe that the situation deserves continued, respectful, discussion and monitoring.   

If the game operators are going to be successful in building a vibrant and positive second world with true ownership they will have to understand and address the concerns of the players on both sides of the above discussions.  The current approach seems to be fair in asking for time to address those concerns.  I will approach with a hopeful attitude for now.   I look forward to getting a fuller and more in depth understanding of how the game operates on chain.  I have some research to do.    

I hope you find my posts informative, helpful, or amusing.  Whatever the case thanks for your time.

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Upland Uncovered
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