I. Introduction

The ambition, born with Bitcoin and driven by the decentralized finance, to build an economy without borders, free from traditional financial and banking systems, requires a shared willingness on the part of every individual to participate in its development.

Distributing power in the hands of each individual without the intervention of a trusted third party and in the absence of a higher authority requires the development of new, adapted and participative stewardship mechanisms.

Depending on the type of protocol and its role within the ecosystem, there are several options for its governance. In this article, we'll take a look at the different forms governance can take, in order to establish the current state of affairs, and then consider ways of filling the gaps in the system as it stands, or improving it.

II. Blockchain governance

First of all, let's introduce the two main types of consensus involved in governance and smooth operation blockchain.

A blockchain is a technology of distributed registers on a network of computers, providing greater data security and transparency. Indeed, it is not enough to corrupt a central entity to take control of the data, since it is accessible on all the computers on the network, each corresponding to a node.

It's important to nuance the difference between a public (decentralized) Blockchain, which is a true disruptive innovation, and a private (centralized) Blockchain, which is an incremental innovation (improving an existing system by a small improvement).

A consensus is a common criterion respected by all blockchain stakeholders to ensure security. Although it can take many forms, they all literally imply proof of participation in the network's operation by making resources available.

a. Proof of work

Introduced in the Bitcoin white paper, the Proof of Work consensus requires node validators to provide energy and computing power to mine each block in the chain.

Here's what controls Bitcoin: majority voting. Since all the nodes on the network are equal, if the majority decides something, it will happen. And if you oppose change, you're free to join other systems, which is why there are so many Bitcoin forks.

(Literally "forks". Bitcoin cash is thus the consequence of a "hard fork", i.e. the creation of a secondary chain keeping a common trunk with the main blockchain (the bitcoin blockchain), which brings improvements compared to the original protocol).

The strongest network wins, and that's why most users, miners and developers are encouraged to respect and protect this mutual agreement. It's in everyone's interest to keep the network active, secure and healthy!

b. Proof of Stake.

The Proof of Stake consensus appeared a little later, born of the ecological problem posed by the PoW consensus, which requires too much energy to operate. Here, network nodes are controlled by validators who have a financial stake in the protocol. They will hold a defined number of tokens native to the blockchain and "stake" them in order to create an additional node in the network.

As with bitcoin's PoW, governance of this type of blockchain is by majority vote.

III. DAOs

Definition: A Decentralized Autonomous Organization is a form of governance in which the only hierarchy is the voting power of each individual, allocated according to the stakes (often financial) involved in the success of a project.

There are many projects in the ecosystem DeFi and others are emerging on a daily basis. Each of these initiatives, driven by a shared desire to free themselves from the control of banks as trusted third parties, seeks to ensure their governance in the most transparent and equitable way possible.

Many projects find the solution to this problem in the creation of a DAO, enabling everyone to have their say in the decision-making process.

- A DAO cannot be stopped or closed.

- No one person or organization can control the entity (no one can manipulate the figures, for example).

- Everything is transparent and auditable, within a supranational framework.

It's a global organization that's open to all, has no jurisdiction, runs on computer code, and no one can defraud. The weight of each person's vote corresponds to the number of project tokens he or she possesses.

IV. Conclusion

Thus, it is important to remember that governance in decentralized finance - although it takes different forms depending on the consensus used or the type of protocol within the ecosystem - is always based on the same fundamentals:

- What's at stake in the success of the project or the operation of the protocol?

- Helping to secure the network

- Simple access to governance

It aims to be as fair and transparent as possible, as the code is open source and inalienable.