Voting For All: How Polkadot Can Improve On-Chain Governance
How stake-weighted voting promises to fix blockchain governance
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The Polkadot Network is an ambitious blockchain project that is working to deliver blockchain interoperability. Broadly speaking, Polkadot will allow different blockchains to connect and communicate, which could resolve difficulties related to crypto transactions and app development. Crypto Briefing covered some of Polkadot’s features in more detail in a previous article.
Those features rely on Polkadot’s governance system, which allows it to undergo changes and introduce new features. Polkadot has chosen to rely on on-chain governance, which means that its changes will be made through binding votes. Furthermore, Polkadot has been fine-tuning this model to make it as fair and accessible as possible.
Here’s how it works.
Polkadot will use a voting system called stake-weighted voting. Typically, on-chain voting means that one token is worth one vote. “One token, one vote” is easy to implement, and naturally, it can be found on several blockchains, including EOS and Cosmos.
However, this gives wealthy investors plenty of power. Polkadot will break away from this model by redistributing and rebalancing voting power.
Stake-weighted voting means that a single Polkadot token can carry a lot of voting power. In this case, tokens that have been staked or “locked down” for a longer period of time are worth more votes. This allows investors who are not so wealthy to have a significant say in matters simply because they are more committed to an outcome.
Polkadot also relies on an elected council, which can propose or cancel referendums if they reach a unanimous decision on the matter. The full process is much more complex, but the council largely exists to propose reasonable referendums and shut down dangerous proposals. It also implicitly represents non-voters by limiting what powerful and active stakeholders can do.
Anyone can propose a referendum by staking tokens, and anyone can back an existing referendum in the same way. The end result is a voting-based governance system that is accessible to most Polkadot users. Stake-weighted voting allows a wide range of users to vote in (and propose) referendums. Meanwhile, the council provides other checks and balances.
Strictly speaking, voting is not what makes Polkadot’s system an on-chain governance model. Instead, the way in which votes are handled is key. Polkadot’s voting process is binding, and the actions that follow a successful vote are hard-coded into Polkadot itself. The fact that successful votes cannot be undone is a hallmark of on-chain governance.
Jack Fransham of Polkadot has explained how this process works. The details of the upgrade process are beyond the scope of this article, but in simple terms, Polkadot’s runtime automatically decides whether to perform upgrades based on its programming. This also ensures that no clients are “left behind” during an upgrade, as Fransham puts it.
This means that Polkadot avoids the time-consuming hard forks that Bitcoin and Ethereum use to perform their upgrades. The end result is that, once a vote is successful, Polkadot’s changes are implemented quite quickly.
That said, this does not make Polkadot unique: other blockchains with on-chain governance, such as Tezos, take a similar approach.
It is important to note that, because Polkadot is an interoperability platform, it is not just a single blockchain. In fact, Polkadot will actually support a large number of “parachains,” which can work in several different ways. Polkadot will auction off slots for these parachains, which are “free to design their own governance mechanisms.”
In this context, Polkadot’s governance system will simply dictate how many parachain slots should be open. The project has noted that malicious parachains could begin to form, and there is no governance mechanism designed to handle this. In a worst-case scenario, a hard fork may be needed to solve this problem—which would go against Polkadot’s usual governance practices.
Polkadot believes that malicious chains are unlikely, but it admits that the governance mechanism could be exploited. “Contentious and victimizing mutations are possible,” Polkadot says. However, such malicious mutations are unlikely to occur because they would require approval from stakeholders and the council.
Will It Work?
It’s not clear whether Polkadot’s governance model will be a success. As of mid-2019, Polkadot’s mainnet launch is still several months away. That’s when the project will truly need to prove whether its highly experimental governance system will serve its needs. Polkadot has mentioned that the governance system could change in the meantime.
There is one snag: in 2017, a large number of Polkadot tokens were accidentally frozen. Polkadot has announced other public and private sales in the meantime, and it is also attempting to un-freeze the inaccessible tokens. This isn’t directly related to Polkadot’s governance, but it could affect the success of the project.
In any case, governance is a behind-the-scenes matter, and Polkadot has plenty else going for it. Polkadot is led by Ethereum co-founder Gavin Wood and his company, Parity Technologies. Polkadot has also partnered with several high-profile blockchains, including Zcash and OmiseGo—and users will probably care about Polkadot’s accomplishments more than its governance.