Community Governance is amongst the many innovations that came out of the Blockchain evolution. It brings decentralization home delivering a
reliably democratic system to those in the ecosystem.
Centralized governance is gradually giving way to decentralized entities around the world due to its failing nature. Power is concentrated in the hands of those at the top. Hence, decision-making takes place where it cannot connect to reality on the ground.
So throughout the world, countries are working to ensure decentralized systems to bring power and decision-making roles to the local level. The mechanism ensures genuine democratization and effective governance that make development a reality.
Governance In Crypto
The Blockchain inherently brings decentralization with a system that removes third parties in transactions that guarantees transparency and accountability. Based on that, decentralization becomes an integral part of the entire structure where everyone becomes a part of the process.
Dash was the first Cryptocurrency that pioneered the idea of community governance to give everyone in the community a say in the direction of the project. Projects like Smartcash, Decred, PIVX, and others followed suit with more innovative structures that provided more democratization.
Governance mostly requires community members to hodl a certain amount of the native currency to make proposals, discuss them and vote on them. Networks make it a point to make it a part of their tokenization, and it ensured there is an incentive for people to behave well.
It gives a voice to everyone who is a member of the community. However, there are shortcomings with some of this community governance structure. With the growth of native currency prices, it becomes expensive for many community members, especially new entrants, to participate in the governance process, undermining democratization.
However, some projects are adjusting to ensure no one is left behind. For instance, at GDEFI, anyone with just one token can vote, creating room for a participatory approach system.
DeFi actually made governance in the Cryptosphere prevalent as networks seek to involve their communities in every process to secure the success of their projects. This development brought about what is widely known as On-Chain Governance.
On-chain governance is a practice for maintaining and executing revisions to a crypto Blockchain network. In this case, the rules are built into the Blockchain to establish changes.
Community members and developers can propose changes then they will vote to accept or reject them. Then the developers will code the outcome of the proposed change into the Blockchain.
A Blockchain is a system that comprises a distributed ledger like a yielded database. Transactions are registered on the Blockchain and dispensed to all of the parties.
Anytime a new transaction happens, a new block requires to be joined to the Blockchain. But, accord protocols need to be ensued for the transaction to be counted as valid.
Miners in charge of nodes are responsible for verifying the data to ensure it is authentic and that the basis concerning the transaction has been accomplished. They validate all transactions to prevent double-spending in the network.
Unlike simple governance arrangements that employ a combination of offline design and online principles adjustments to implement reforms, on-chain governance methods operate exclusively online. Modifications to a Blockchain are submitted via code changes.
Accordingly, developers need to tender amendment suggestions to execute revisions to the Blockchain. The team, and developers, are liable for organizing and reaching an agreement between community members.
A community-led economy like GDEFI has numerous advantages that deliver sustainability, democratization, and growth. Below are some elements the mechanism brings to any decentralized economy:
Transparency and Accountability: When a project institutes a governance system, it creates room for all community members to verify all processes. The core team becomes accountable to the community and can’t make decisions without consulting them.
Decision-Making: Since everyone who is a part of the community can propose, discuss and vote on decisions. This participatory approach leaves room for all expertise to be on board, and the project can leverage that for growth.
Good Behavior: Governance provides the incentives for community members to behalf well and gives their best. Since governance makes the project community ownership, everyone behaves well and gives their maximum best.
Fraud Prevention: It is hard to withness a rug-pull in community-oriented projects. The reality is that community members are part of everyday management and decision-making, which doesn’t leave loopholes for exploitation.
Community Governance has come a long way to hand power to community members. Check out GDEFI’s community governance principles on our website and whitepaper.