Robust Governance Essential for DLT Security, Fairness, and True Decentralization → Research

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Briefing

Distributed Ledger Technologies (DLTs), despite their promise of decentralization, suffer from fundamental governance flaws that lead to critical vulnerabilities. This paper systematically categorizes these vulnerabilities and proposes a comprehensive taxonomy of essential governance properties, bridging insights from cryptography, social choice theory, and e-voting systems. This framework provides actionable pathways to design robust, transparent, and enforceable governance mechanisms, which is critical for the future architecture and security of decentralized systems.

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Context

The initial vision for DLTs, popularized by Bitcoin, emphasized decentralization and trustlessness through cryptographic structures and consensus algorithms. However, practical implementations, including Decentralized Autonomous Organizations (DAOs), often struggled with governance, leading to unexpected centralization, manipulation, and security vulnerabilities. Existing research identified some governance challenges but lacked a comprehensive framework linking specific governance deficiencies to a suite of potential attacks and formal security notions.

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Analysis

The paper introduces a comprehensive framework by identifying critical governance properties and linking their absence to specific vulnerabilities in DLTs. It categorizes vulnerabilities such as voter coercion, vote-buying, and plutocracy, which arise from issues including public votes, non-binding elections, and purchasable voting power. The proposed taxonomy includes properties like equal suffrage, non-purchasable voting power, incentive alignment, binding outcomes, ballot secrecy, verifiability, and coercion resistance. This approach fundamentally differs from previous work by providing actionable technical solutions, drawing from e-voting and social choice theory, to achieve these properties, even addressing mutually exclusive trade-offs such as binding elections versus fee-less voting.

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Parameters

Core Concept → DLT Governance Vulnerabilities
Key Authors → Aida Manzano Kharman, William Sanders
New Taxonomy → DLT Governance Properties
Identified Vulnerabilities → Voter Coercion, Vote Buying, Plutocracy, Malicious Protocol Updates

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Outlook

Future research should focus on developing scalable technical solutions for mutually exclusive governance properties, such as achieving permissionless access without purchasable voting power and enabling fee-less participation. This theoretical foundation can unlock DLTs with truly democratic voting mechanisms, enhanced protection against economic manipulation, and more resilient protocol upgrade processes. It also necessitates interdisciplinary collaboration to integrate regulatory, ethical, and socio-technical insights into governance design, fostering standardization for universally accepted good governance frameworks.

Verdict

This research provides an indispensable blueprint for designing resilient and equitable decentralized systems, fundamentally re-evaluating the promise of DLTs through the lens of robust governance.

Signal Acquired from → arxiv.org