On-Chain Governance

Definition ∞ On-chain governance refers to the process by which decisions about a blockchain protocol’s future are made directly through the blockchain’s own rules and smart contracts. Token holders or other designated participants vote on proposals, and the outcomes are immutably recorded on the ledger. This method aims for transparency and direct stakeholder participation in protocol development. It contrasts with off-chain governance, which relies on community discussion and social consensus. Context ∞ On-chain governance mechanisms are a subject of considerable attention as decentralized autonomous organizations (DAOs) and protocols mature. Debates often focus on the effectiveness of various voting systems, voter apathy, and the potential for plutocracy. The evolution of these systems is critical for the long-term adaptability and community direction of decentralized networks.