What is On-Chain Governance Proposal?

On-chain governance proposals, stored and executed on the blockchain, provide transparency, immutability, decentralization, and community engagement in the decision-making processes of decentralized organizations.

Feb 16, 2025 at 07:06 am

Key Points:

• Introduction to On-chain Governance and Proposal Systems
• Benefits and Advantages of On-chain Governance
• Types of On-chain Governance Proposals
• Process for Creating and Submitting On-chain Governance Proposals
• Evaluation and Approval Process for On-chain Governance Proposals
• Voting and Execution of On-chain Governance Proposals
• Common Pitfalls and Challenges in On-chain Governance
• FAQs Related to On-chain Governance and Proposals

What is On-Chain Governance Proposal?

On-chain governance proposals are a type of governance proposal that is submitted to a decentralized autonomous organization (DAO) or other blockchain-based platform for review and voting. These proposals are stored and executed on the blockchain, providing a transparent and verifiable record of the governance process.

Benefits and Advantages of On-chain Governance

• Transparency: All proposals and votes are recorded on the blockchain, ensuring visibility and accountability.
• Immutability: Once a proposal is approved and executed, it cannot be altered or reversed, enhancing the security and stability of the network.
• Decentralization: Voting power is distributed among participants, eliminating the influence of central authorities.
• Community Engagement: Proposals encourage broader participation and feedback from the community, fostering a sense of ownership and shared responsibility.

Types of On-chain Governance Proposals

• Protocol Changes: Proposals that modify the underlying blockchain protocol or platform.
• Feature Updates: Proposals that introduce new features or improvements to the network.
• Budget Allocation: Proposals that distribute funds for specific projects or initiatives.
• Ecosystem Partnerships: Proposals that establish collaborations with other projects or entities.

Process for Creating and Submitting On-chain Governance Proposals

1. Proposer Identification: A proposal can be submitted by any member of the community or project team.
2. Proposal Creation: The proposal is drafted and includes details such as the proposed changes, justification, and implementation plan.
3. Proposal Submission: The proposal is submitted to the designated governance platform for review.

Evaluation and Approval Process for On-chain Governance Proposals

1. Community Review: The proposal is open for community discussion and feedback.
2. Governance Panel Review: A governance panel or committee evaluates the proposal and provides recommendations.
3. Voting: Token holders participate in a vote to approve or reject the proposal.

Voting and Execution of On-chain Governance Proposals

1. Weighted Voting: The voting system typically gives more weight to larger token holders.
2. Quorum Requirement: A minimum number of tokens must vote to ensure participation and legitimacy.
3. Majority Vote: The proposal passes if it receives a majority of votes from eligible voters.
4. Execution: The approved proposal is implemented by the designated developers or execution team.

Common Pitfalls and Challenges in On-chain Governance

• Low Participation: Achieving widespread participation in voting can be challenging, especially in large-scale DAOs.
• Vulnerability to Attacks: On-chain governance can be susceptible to vote manipulation or hacking attempts.
• Technical Complexity: The technical requirements for submitting and voting on proposals can deter participation.
• Governance Fatigue: Prolonged governance processes or excessive proposals can lead to community apathy and burnout.

FAQs Related to On-chain Governance and Proposals

• Q: What are the requirements to submit an on-chain governance proposal?

  • A: Requirements vary depending on the platform but typically include membership in the DAO or holding a minimum number of tokens.

• Q: How is the approval threshold determined for on-chain proposals?

  • A: The approval threshold is often customizable and set by the DAO's community through a prior governance proposal.

• Q: Can on-chain governance proposals be amended or revised after submission?

  • A: Amendments or revisions to proposals must follow the same submission and approval process as initial proposals.

• Q: What are the potential risks associated with on-chain governance?

  • A: Risks include low participation, governance fatigue, malicious voting, and platform vulnerabilities.