The decentralized properties that make blockchain architecture unique may also be its Achilles heel, which demonstrates the importance of bringing network governance on-chain to foster more inclusive and democratic consensus on network upgrades.
Governance change is the key to unlocking the innovative potential of decentralization
There are many bitter arguments over blockchains as to how they should run, including consensus mechanisms, implementing changes, or upgrading frameworks. These debates have often plagued network communities, leading to controversy that eventually culminated in hard forks. Despite the success of these consensus systems, as evidenced by rising trading volumes and valuations, the future of Bitcoin and Ethereum may be in doubt.
The term consensus has to do with everything contained in the code for the two largest networks, such as the transfer of value, how much miners get paid, smart contract operations, and other basic network-coded functionality. Unfortunately, this means that network consensus is not part of solving any serious problems or implementing even the tiniest upgrades. This parallel governance process is often highly political, especially off-chain.
For evidence to support this point, look at the results after the Ethereum Classic debacle. Or consider how long it took Ethereum to update its consensus mechanism from proof-of-work to proof-of-stake. Implementing any network upgrade in this way is difficult, time-consuming, and not an on-chain consensus task.
You can think of consensus as a parallel economic system whereby participants from all over the world can operate under a common economic framework without any legal oversight or geographical constraints. Nevertheless, without any connection between governance and consensus, any major upgrade attempt could in principle happen without the consent or blessing of the community.
Fortunately, other networks are competently demonstrating that on-chain governance is possible and effective when it comes to adapting to the ever-changing digital environment.
Balancing goals by promoting more participatory on-chain governance
When evaluating the scope of the problem through the lens of Ethereum, its Ethereum Classic hard fork was at a serious disagreement over whether the code is the law or can be broken to protect the community. Currently, both networks are compatible for the mirrored network upgrade in Ethereum Classic.
However, disagreements effectively split the community down the middle as Ethereum’s core infrastructure does not provide an on-chain governance mechanism to facilitate this dialogue. Solidarity will be the key to longevity for blockchain, and such a breakdown can lead to unnecessary intrusions and distractions.
love the network Tezos and polka dot has responded to these developments with a more community-oriented approach. The community of the network can vote on proposals and upgrades by employing an on-chain governance model rather than more centralized off-chain governance measures. Apart from improving overall participation, it provides skin to every stakeholder in the game.
The success of these measures is clear, Tezos is able to upgrade itself in much the same way that a computer or phone installs software updates from time to time. In the past two years alone, Tezos has undergone several major upgrades, each of which has added value to the overall network while developing the infrastructure and setting the stage for future updates.
By comparison, it has taken bitcoin four hard forks to implement only minor changes. The more straightforward approach to on-chain governance makes other competing networks like Polkadot more resilient and adaptable to changes, not to mention improving overall blockchain democratization by decentralizing control over a network’s future.
If blockchain does indeed attempt to challenge the status quo, network governance should reflect that notion by increasing the role of gatekeepers and moving away from the politics that divides communities. By combining consensus, governance and protocol in one package, these divisive hard fork events can be avoided outright, all while reinforcing the approach and securing the longevity of these systems.
The flexibility of on-chain governance by design means the ability to respond to external technology changes that would be difficult for other, more rigid architectures to adopt. Although code may be law in the blockchain universe, it is still made up of networks of humans, and governance should absolutely be a mirror reflection of that reality.
Do you think the Bitcoin and Ethereum chain will follow the example of Tezos and Polkadot to expand on-chain governance? Let us know in the comments section below.
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