Governance is the process of forming a consensus about how decisions are made. For DAOs and public blockchains, decentralized governance is important yet challenging.
The large size of blockchains necessitates governance for management and coordination of the entire community toward a unified goal. Furthermore, effective blockchain governance is imperative for blockchains to adapt, change and interact. Participation from stakeholders in matters regarding the evolution and future direction of the blockchain has significant effects on existing and prospective users.
Deemed crucial for the decentralization of systems, sustainability, and changes to the network protocol, the governance process of a blockchain is vital to its success.
In this article, we shall look at the features that enable effective governance and the different mechanisms deployed by three interoperable blockchains - Polkadot, Cosmos, and Avalanche. To understand the technical architecture of these blockchains, feel free to go through the linked article.
Blockchain Governance - Polkadot, Cosmos, and Avalanche
A good governance process is one that allows for maximum community participation, frictionless updates, and implementation.
Let’s dive into the governance framework of Cosmos, Avalanche & Polkadot with an emphasis on Gov2 of Polkadot. It won’t be a direct comparison between these blockchains, primarily because Avalanche doesn’t have on-chain governance & Cosmos is still in the process of implementing one.
Zones on Cosmos deploy distinct governance styles to suit their value proposition. However, as far as the Cosmos Hub is concerned, it uses a hybrid governance model.
- Off-chain governance platform for discussions
- On-chain voting for decision-making and execution
The on-chain mechanism is utilized for passing text proposals, changing consensus parameters, and spending funds from the community pool. The enactment of governance decisions is carried out via a forking mechanism (protocol fork), similar to most other blockchains.
Cosmos encourages engagement from all stakeholders involved. As a result, all token holders can vote on Cosmos. The network expects each validator to vote on every proposal. Additionally, if a delegator abstains from a vote, the validator they delegate to assumes the voting power in their stead.
*Delegators - are people that cannot or, for some reason, do not wish to operate validator nodes. However, these people can still participate in the staking process as delegators. Validators on Comos are chosen based on their total stake, which is the sum of their self-delegated stake and of the stake that is delegated to them. This proves effective as it makes delegators a safeguard against validators that exhibit bad behavior.
An on-chain governance mechanism is in the works for Avalanche. At present, it deploys on-chain voting for critical network parameters, which include (as per its whitepaper)
- Minimal staking amount required to participate
- Minimal amount of time required to stake
- Maximum amount of time a node can stake
- Minting rate
- Transaction fee amount
Thus, Avalanche only permits a pre-determined number of parameters to be altered via governance, increasing network predictability and safety. Additionally, all parameters listed are subject to limits within specific time bounds.
Anyone with AVAX (the native token of the network) can participate in governance, and any node participating in the network can issue a governance proposal.
Like Zones on Cosmos, additional subnets on Avalanche have their own unique economic and governance structure.
Polkadot’s new governance model, Gov2, is designed to be more inclusive and decentralized as it enables anyone to start a referendum at any time. It addresses the flaws of centralization by removing “first-class citizens” such as the Council and Technical Committee. It also eliminates the alternating timetable of proposals and the public proposal queue.
The existing tri-cameral governance system of Polkadot comprises
- A Technical Committee for managing upgrade timelines which makes governance for critical bug fixes faster than usual.
- An elected Council representing passive stakeholders and managing parameters, admin, and spending proposals.
- A general voting system for all other matters.
It is important to note that while these representative bodies exist, all changes must pass through a public referendum. Unfortunately, under the current mechanism, only one referendum can be voted upon at a time, and the process is prohibitively slow with a 28-day voting period. This, coupled with the limited bandwidth of the Council, implies the system favors deep consideration of very few proposals rather than broad consideration of very many proposals. However, the Technical Committee can work with the Council to fast-track a critical technical upgrade.
Additionally, the Council pre-approved and elected by the token holders can veto the token holders themselves. This setup is an excellent tool for maintaining checks and balances without intervention from external governance actors.
While the mechanism has its advantages, it also has certain disadvantages; the Council & Technical Committee are primarily centralized, putting the protocol and individuals at some risk.
Gov2 - Polkadot’s next-generation governance system
Gavin’s article provides a deep insight into the specifics of Gov2. This article gives an overview of how Gov2 seeks to solve the existing problems in the system.
Let’s begin with what remains the same in the new mechanism.
- The original Polkadot governance tenet stands. 50% of the total stake, with sufficient conviction, will still determine the system’s future.
- Conviction Voting stands. Conviction Voting gives greater weight to those willing to lock their tokens for longer.
- As does the technocratic collective with modifications in importance, size, composition, and membership mechanics.
The first-class citizens in the current governance will be replaced with a first-class decision-making mechanism - the referendum. The main difference between the existing and new governance is that Gov2 permits lots of referenda, increasing the number of motions that can be passed at a time.
With Gov2, the proposer can specify which Origin they would like their proposal to be executed with. Origins signify the importance of a proposal. For instance, The Root Origin has the highest thresholds and safeguards. Those Origins which convey relatively little power (e.g., the Tip Origin) have shorter consideration periods and lower thresholds for approval.
The origin determines the track that is assigned to the proposal. All tracks have their own limit on the number of referenda which can be decided on at once. For instance, Root Origin has a limit of one proposal.
To evade the risk of centralization while allowing optimization of the decision-making process, Gov2 boasts a self-governing expert body (The Fellowship). The primary goal of the Fellowship is to represent the humans who embody and contain the technical knowledge base of the Polkadot network and protocol. The Fellowship has no power to subvert the overall stakeholder decision. However, they can reduce the timeline of a referendum.
The Fellowship is designed with broader membership criteria (it shall work well with thousands of members) and a lower barrier to entry (in terms of administrative process flow and expectations of expertise). One can easily become a member by placing a small deposit.
Members of The Fellowship are given ranks “to designate the degree to which the system expects their opinion to be well-informed, of a sound technical basis and in line with the interests of Polkadot.” Additionally, a constitution exists to govern the operations and lay out the requirements for the different ranks in the Fellowship.
Moving on to the enactment of upgrades, using the WASM meta-protocol, Polkadot can implement upgrades and successful proposals sans a hard fork. “Anything that is within the STF, the transaction queue, or off-chain workers can be upgraded without forking the chain.”
Governance is an integral component of any decentralized system. There is no perfect governance system, only improved iterations. While the governance systems need to be flexible, these also need to align with the long-term vision, values & beliefs. A governance that keeps evolving and building into the future, supporting a broad range of values while offering transparency and trust minimization, is one that we need. And Polkadot seems to be on the right path for now.
If you find this helpful, please support through subscribing and following.
Everythingblockchain 🧐 - Freethinkers, Writers ✍, Blockchain explorers 🔭
In pursuit of simplifying the different blocks of the chain metaverse
The information provided through this work is intended solely for educational purposes and must not be treated as investment advice. Any lapses in presenting any of the information correctly are ours alone. We disclaim any liability associated with the use of this content.