It is precisely this factor that the SEC is currently exploring in order to determine how regulation should be handled. While many of the most popular DeFi protocols, such as Uniswap, Synthetix, and Compound use some form of decentralized governance, it should be noted here that just because a project is part of the DeFi sector, does not automatically mean that it follows a democratic structure of governance.Īspects of DeFi, such as transparency and automation may give the impression that a project is democratic, but control of the direction of a protocol may still rest in the hands of the developers and a closed group of major stakeholders. There is no centralized control, and anyone with a stake in the project, no matter how small, can have some part in the future of the protocol. We have governance in every area of our lives, so why it is such a big deal in the context of DeFi? Well, one of the central ideals of many DeFi solutions is that they are run by and for the participants. Implicit in this definition is the element of wide stakeholder participation. DeGov: DefinitionĪt its simplest, DeGov refers to Decentralized Governance the frameworks put in place to regulate the management of decentralized platforms. Some envisage decentralized government, where people are rewarded for proper and pro-social participation, protected from intimidation, and are not sidelined from the overall political process by voter suppression tactics, opaque processes, or special interest groups that have agendas that are ultimately detrimental to society.

Is there a better way to run a decentralized autonomous organization, or will better governance involve a trade-off where certain elements are centralized? This is an exciting space to be involved in, as models that allow for better decentralized management could be exported to our real-world political systems. This version of decentralized governance sounds good in theory, but Buterin points out how it can be quite easily manipulated in a number of ways. A recent blog post by Vitalik Buterin, Moving Beyond Coin Voting Governance, takes aim at the predominant way DeFi projects are governed through the distribution of governance tokens, which confer voting rights based on the stake someone has in a DeFi protocol.

Software wrapper defi