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A Summary of

Governance deep dive

by
Alexandra Tran, Steven Elleman
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Introduction: Governance

  • Governance refers to the systems and processes by which systems maintain themselves
    • Governing process often fail themselves, but are also the only way a system can improve itself
  • Governing bodies are usually centralized
    • Public, permissionless blockchain systems like Bitcoin and Ethereum are forcing us to reevaluate what we know about good governance
  • Blockchain governance is important for various system improvements such as technical development/maintenance and recovering from attacks
  • A good governance model is self-sustaining mechanism for improvement and growth
    • Allows for innovation and includes mechanism to kill bad bills
    • Adheres to concept of fallibilism -- understands that while we can never reach political truth, we can always move closer to it
  • How to get good governance:
    • Institutionalized metagovernance
    • Ease of exit

Blockchain Governance

  • Governance in cryptocurrencies relate to decisions of two things: the rules of the protocol, and the incentives the network is based on
    • The incentives of the network maintain the integrity of the rules
  • There are three primary network actors: miners, users, and developers
  • Economic incentives are proofs of work, stake, space, and burn
    • All have similar structures and use resources external to the system to contribute to the transaction history and be paid in something valuable
  • If “code is law,” in traditional governance, the users would pick the developers who amend the code on the basis of a metacode
    • For dominant blockchains, the developer communities can amend the code through either soft or hard fork; i.e. amends compatible with previous version or not
    • Amendment is only “passed” if users update their local code, requiring explicit consent

Moving Forward

  • In major platforms there is implicit political power without a formal political process
  • Should there be a political process? Should amendments be addressed within the system or by other means?
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