Governance
How we decide the rules of the game.
#Plain-English Definition
Governance is the system for making collective decisions. In the context of blockchain and prediction markets, it usually refers to how a protocol (like Polymarket, Gnosis, or UMA) is managed.
#On-Chain Governance
Most decentralized platforms use Token Voting.
- Proposal: Someone suggests a change (e.g., "Add a new market category").
- Vote: Token holders vote "Yes" or "No". Your voting power is usually proportional to how many tokens you own.
- Execution: If the vote passes, the code updates automatically (or a multi-sig wallet executes the will of the voters).
#Governance in Prediction Markets
Governance is critical for:
- Dispute Resolution: Who decides the winner if the outcome is ambiguous? (Often a decentralized oracle like UMA).
- Whitelisting: Which markets are allowed to be created?
- Fees: How much does the platform charge?
#Key Takeaways
- Governance is the "politics" of decentralized protocols.
- It replaces the centralized CEO/Board with a community of token holders.
- Good governance is essential for keeping a platform fair, secure, and evolving.