Chapter 9: Penalty and Appeal Mechanism

9.1 Why Penalties Are Needed

Any reputation system requires the ability to correct errors. When contributions are incorrectly recognized or fraud exists, the system must be able to make corrections.

The penalty mechanism is the ultimate safeguard of GMC's credibility.

9.2 Penalty Types

Type	Effect	Severity
Deduct curMerit	Reduces current MeriToken, affecting immediate voting power	Lighter
Deduct minMerit	Lowers the floor value, affecting long-term minimum reputation guarantee	Severe

Deducting minMerit is a more severe penalty—it breaks the rule that "the floor value only increases, never decreases," meaning that the accumulation of historical contributions is partially revoked.

Severity Reference

Violation Level	Penalty Method	Example
Minor	Deduct partial curMerit	Exaggerated contributions
Moderate	Deduct significant curMerit	Duplicate submissions
Severe	curMerit + partial minMerit	Collusion to farm Merit
Extreme	Major deduction of both	Systematic fraud

9.3 Trigger Process

Complaint filed → Stakeholder acceptance vote → [Rejected if not passed] → Penalty vote → Execution

Rules

1. Complaints must target a specific Merit acquisition batch: vague complaints are not allowed; they must point to a specific event
2. Stakeholder acceptance: a certain proportion of relevant stakeholders must accept the complaint before a formal vote is initiated
3. Penalty vote: requires a higher passing threshold (e.g., 3/4 majority)
4. Automatic execution: once the vote passes, the system automatically applies the deduction

Preventing Malicious Complaints

• Complainants must provide evidence or justification
• Frequent malicious complainants may be flagged
• Complaint records themselves are stored on-chain, ensuring transparency

9.4 Appeals

The penalized party has the right to appeal:

1. An appeal may be filed within a certain period after penalty execution
2. A broader group of community members re-votes (to avoid the same group judging repeatedly)
3. If the appeal succeeds, the penalty is revoked and MeriToken is restored

9.5 Interaction with Other Mechanisms

• Penalties are the only mechanism that can reduce minMerit (aside from natural decay)
• Penalty records are stored on-chain, including the penalized entity, reason, amount, and voting results
• Penalty history affects the entity's social reputation (viewable by others)

9.6 Discussion Notes

Design philosophy of the penalty mechanism:

• Must be evidence-based (targeting specific batches), preventing "baseless accusations"
• Graduated penalties reflect the principle of proportionality
• Complaints require a threshold (stakeholder acceptance), preventing malicious harassment
• The right to appeal safeguards fairness; expanding the scope prevents echo chamber effects
• The fact that minMerit can be reduced by penalties serves as the strongest deterrent against integrity violations