To understand the importance of blockchain governance and the debate surrounding it, It is important to first define blockchain governance and it’s role in the entire blockchain ecosystem.
Blockchain governance in cryptocurrencies relates to decisions about two things: the rules of the protocol (the code) and the incentives the network is based on (the economics).
Blockchain protocols have significantly evolved since their inception, however, it is undeniable that they are still in their nascent stage and there is significant room for improvements before we arrive at their fullest potential. Every day several new innovative solutions in areas such as scalability, privacy etc emerge and are implemented into protocols. There have been implementations directed by core developers and the community that have been significantly successful and several have failed too. Adaptability is key. The most recent significant incident of a hard fork was that of the Monero (XMR) community forking to implement ASIC resistance into their protocol to avoid the centralization of mining. This demonstrates the fact that blockchain protocols need to be able to adapt and make improvements to sustain and survive in the long run. In an ecosystem like this, the importance of a governance system to administrate proposals, implementations, and other crucial decisions is drastic. With the decentralized nature of the entire landscape, governance is very tricky and critical as it needs to not be centralized and permissioned. Several major blockchain projects such as Tezos[1], Dfinity[2], Decred[3] etc have introduced on-chain governance centered models where governance is an integral part of the protocol just like any other component. However, before diving into their proposed solutions it is important to understand and deconstruct the existing governance system and break down the benefits and tradeoffs.
