Governance

Definition ∞ Governance refers to the systems, processes, and rules by which an entity or system is directed and controlled. In decentralized networks and digital assets, governance mechanisms, often facilitated through Decentralized Autonomous Organizations (DAOs), empower token holders or network participants to propose, vote on, and implement changes to protocols, parameters, or treasury allocations. This framework aims to distribute decision-making authority among stakeholders.
Context ∞ The evolution of decentralized governance models is a prominent area of development in the cryptocurrency sector, featuring ongoing experimentation with on-chain voting, quadratic voting, and reputation-based systems. Key debates address the efficacy of current DAO structures in achieving equitable and efficient decision-making, particularly concerning protocol upgrades, treasury management, and dispute resolution processes.