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Governance

What is on-chain Governance?

Off-chain governance is a decentralized system for managing governance conflicts by allowing token stakeholders to vote on decisions that affect the network. This voting process is executed via appointed delegates instead of each node.

On-chain governance is a system for managing and implementing changes to cryptocurrency blockchains. In this type of governance, rules for instituting changes are encoded into the blockchain protocol. Developers propose changes through code updates and each node votes on whether to accept or reject the proposed change.

On-chain governance is a system for managing and implementing changes to cryptocurrency blockchains. In this type of governance, rules for instituting changes are encoded into the blockchain protocol. Developers propose changes through code updates and each node votes on whether to accept or reject the proposed change.

If a majority accepts the proposed change, it is implemented. In this way, decentralized changes can be made to the protocol without the need for coordination between core developers and miners.

Depending on the cryptocurrency protocol, governance can vary. In some protocols, such as Dash, changes to the protocol are made by miners voting with their hashing power.

Some examples of on-chain governance tokens are Decred, Lisk, Ark, Tezos, Dash, and EOS.

Are governance tokens worth it?

Justifications for the potential value of governance tokens:
In a nutshell, governance tokens provide specific benefits, including the following: Cash flow rights: Protocols may charge their users a fee. These fees are collected, and a governance vote may elect to transfer a part of these fees to token holders, similar to how dividends are distributed in the case of stocks.

What can you do with governance tokens?

Governance tokens are tokens created by developers to enable token holders to influence the future direction of a system. Holders of governance tokens have the ability to influence project choices by submitting or voting on new feature requests and even modifying the governance system itself.

Is Eth a governance token?

The Ethereum Name Service has announced the creation of governance tokens for its members. These tokens will be used in conjunction with its newly formed DAO, which will let members vote on topics such as the treasury and other matters. Governance tokens will have no market value; users will value the ENS names themselves. (Nov 1, 2021).


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