SoK: Blockchain Governance (2201.07188v4)

Abstract: Blockchain systems come with a promise of decentralization that often stumbles on a roadblock when key decisions about modifying the software codebase need to be made. This is attested by the fact that both of the two major cryptocurrencies, Bitcoin and Ethereum, have undergone hard forks that resulted in the creation of alternative systems, creating confusion and opportunities for fraudulent activities. These events, and numerous others, underscore the importance of Blockchain governance, namely the set of processes that blockchain platforms utilize in order to perform decision-making and converge to a widely accepted direction for the system to evolve. While a rich topic of study in other areas, governance of blockchain platforms is lacking a well established set of methods and practices that are adopted industry wide. This makes the topic of blockchain governance a fertile domain for a thorough systematization that we undertake in this work. We start by distilling a comprehensive array of properties for sound governance systems drawn from academic sources as well as grey literature of election systems and blockchain white papers. These are divided into seven categories, confidentiality, verifiability, accountability, sustainability, Pareto efficiency, suffrage and liveness that capture the whole spectrum of desiderata of governance systems. We proceed to classify ten well-documented blockchain systems. While all properties are satisfied, even partially, by at least one system, no system that satisfies most of them. Our work lays out a foundation for assessing blockchain governance processes. While it highlights shortcomings and deficiencies in currently deployed systems, it can also be a catalyst for improving these processes to the highest possible standard with appropriate trade-offs, something direly needed for blockchain platforms to operate effectively in the long term.

• The paper introduces a comprehensive framework that categorizes blockchain governance into seven distinct properties.
• The paper evaluates ten blockchain systems, revealing that no model fully satisfies all governance criteria.
• The findings guide future research and practical improvements in designing balanced and effective blockchain governance mechanisms.

Systematization of Knowledge (SoK): Blockchain Governance

The paper under discussion investigates the multifaceted and complex issue of governance in blockchain systems, a topic that is critical as these platforms continue to grow in both scope and influence. Authored by Aggelos Kiayias and Philip Lazos, the work meticulously dissects the concept of blockchain governance to provide a structured, comprehensive framework that aids in understanding the governance mechanisms of blockchain systems. This analysis is pivotal given the decentralized nature of blockchain platforms, which, while offering many benefits, also present unique challenges when it comes to governance and decision-making processes.

Blockchain Governance Framework

The paper categorizes governance properties into seven distinct, yet interrelated, categories:

1. Suffrage - This touches on who gets to participate in decision-making. It examines mechanisms like identity-based, token-based, and mining-based suffrage, among others. Each suffrage type has implications for how power and control are distributed within the system.
2. Pareto Efficiency - The paper assesses whether the decision-making process results in outcomes that cannot be improved for one party without making another party worse off. It is crucial in ensuring that governance mechanisms are inclined towards efficient outcomes.
3. Confidentiality - It covers aspects like secrecy, pseudonymity, and coercion resistance, which are essential for protecting voter identities and ensuring that voting processes are secure and private.
4. Verifiability - This property ensures that all participants and external observers can verify that the voting was conducted correctly and that the whole process lacks any unauthorized interference.
5. Accountability - The paper explores mechanisms that hold decision-makers responsible for their decisions. This is crucial in ensuring that decisions have a clear trace to the individuals or entities that made them.
6. Sustainability - Sustainability reflects on providing incentives for both development and participation, ensuring ongoing engagement and the continuous evolution of the platform.
7. Liveness - This property assures that the system can respond to urgent issues promptly while also facilitating regular updates and changes.

Evaluation and Results

The authors evaluate ten blockchain systems against these governance properties, providing a critical review of each system's strengths and weaknesses. The evaluation reveals that while certain properties are addressed by some systems, no single blockchain governance model is optimally comprehensive across all categories. The disparities in how these properties are satisfied indicate a need for careful design and consideration of trade-offs in developing governance mechanisms.

Implications for Future Research and Practice

The paper's implications extend into both theoretical and practical realms. The categorization of governance properties can serve as a foundation for future research on blockchain governance systems, potentially guiding the development of more robust decision-making frameworks. Practically, blockchain platforms can leverage the insights from this analysis to refine governance models, addressing shortcomings and challenges identified by the paper.

Conclusion

By presenting a systematic evaluation of blockchain governance systems, the paper provides valuable insights into how decentralized systems can structure decision-making processes to ensure efficient and equitable outcomes. The structured approach to categorizing and evaluating governance properties sets the stage for ongoing dialogue and development of best practices in blockchain governance. This is an essential read for researchers and practitioners focused on decentralization and the sustainable development of blockchain technologies.