Vitalik Buterin says that things must progress beyond coin voting in its current form, proposing alternatives like as “proof-of-humanity” or “proof-of-participation.”
Vitalik Buterin, co-founder of Ethereum, has conducted an in-depth examination of token-based decentralised governance, arguing that existing voting procedures are inadequate and may be preventing the DeFi sector from reaching its full potential.
Buterin noted in a lengthy blog post published Aug. 16 that the crypto community must “move beyond coin voting in its current form.”
At the moment, the majority of decentralised finance (DeFi) projects manage protocol upgrades, reward issuance, and other aspects of governance elections through voting distributed among token holders based on their holdings size.
Many projects, however, have come under fire for allowing whales to dominate their voting process by holding significant swaths of governance tokens, allowing them to vote in support of their personal interests.
Buterin emphasised two points about token-based governance, emphasising the potential of incentives misalignment among community members and the vulnerability of governance votes to “vote-buying” and “outright attacks.” He continued:
“The most important thing that can be done today is moving away from the idea that coin voting is the only legitimate form of governance decentralization.”
Buterin emphasised the popularity of “unbundling,” in which “vote-buying” and manipulation of governance systems may be accomplished through borrowing on crypto collateral and voting using tokenized assets.
In the context of unbundling, he continued, “the borrower has governance authority without economic interest, and the lender has economic authority without governance authority.”
Beyond token-based governance, Buterin pushed for the study of “Proof-of-Humanity”-based governance systems in which each protocol’s user receives one vote.
“Coin voting fails because while voters are collectively accountable for their decisions (if everyone votes for a terrible decision, everyone’s coins drop to zero), each voter is not individually accountable.”
Buterin has suggested a method called “Proof-of-Participation,” in which voting privileges are restricted to protocol users who have contributed work to the benefit of a project or its community, implying that voting rights might be distributed exclusively to addresses that fulfil a certain task.
Additionally, Ethereum’s co-founder proposed that quadratic voting — in which a single voter’s power is proportionate to the square root of the economic resources committed to a decision — could provide novel options for decentralised government.
Additionally, he proposes a “skin in the game” strategy that holds individual voters accountable for their choices, stating:
“Coin voting fails because while voters are collectively accountable for their decisions (if everyone votes for a terrible decision, everyone’s coins drop to zero), each voter is not individually accountable.”
