Overview
On-chain governance is a highly transparent and automated form of decision-making. The rules for governance are hardcoded into the protocol itself, and the results of a vote directly trigger a change in the blockchain's state or code.
How it Works
- Proposal: A developer or stakeholder submits a code change.
- Voting: Token holders vote using their private keys. The weight of the vote is usually proportional to the number of tokens held.
- Enactment: If the vote passes, the protocol automatically updates itself after a 'timelock' period.
Examples
Tezos, Polkadot, and many DeFi protocols (like MakerDAO) use forms of on-chain governance.