What is Decentralized Governance?

What is Decentralized Governance?

The rules of decentralized organizations are primarily enforced by code, rather than the legal system. Changes to the governance, require the community to discuss, propose, and vote. As the governance is specific to each project, individuals are able to easily choose which communities and governance sets they participate in.

Additionally, decentralized governance allows for more direct voting versus nation-states or companies. Participants are able to choose whether they vote on proposals or delegate their voting power to community experts. While this can empower community involvement from members, it can also lead to voter apathy and delays in governance actions.

Benefits of Decentralized Governance

Decentralized governance gives power directly to token holders. This limits single points of failure, like corruption, censorship, manipulation, or bribery.

Decentralized governance also helps align incentives of community members. This enables better coordination of actions and assign of resources across stakeholders. Many protocols distribute governance rights via tokens to their users as an incentive, which can further align interests over time.