Blockchain Governance: What We Can Learn from the Economics of Corporate Governance

Understanding the complexities of blockchain governance is urgent. The aim of this paper is to draw on other theories of governance to provide insight into the design of blockchain governance mechanisms. We define blockchain governance as the processes by which stakeholders (those who are affected by and can affect the network) exercise bargaining power over the network. Major considerations include the definition of stakeholders, how the consensus mechanism distributes endogenous bargaining power between those stakeholders, the interaction of exogenous governance mechanisms and institutional frameworks, and the needs for bootstrapping networks. We propose that on-chain governance models can only be partial because of the existence of implicit contracts that embed expectations of return among diverse stakeholders.