The governance of blockchains and system based on distributed ledger technology

Carlo Gola (), Valentina Cappa (), Patrizio Fiorenza (), Paolo Granata (), Federica Laurino (), Lorenzo Lesina (), Francesco Lorizzo () and Gabriele Marcelli ()
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Carlo Gola: Bank of Italy
Valentina Cappa: Bank of Italy
Patrizio Fiorenza: Bank of Italy
Paolo Granata: Bank of Italy
Federica Laurino: Bank of Italy
Lorenzo Lesina: Bank of Italy
Francesco Lorizzo: Bank of Italy
Gabriele Marcelli: Bank of Italy

No 773, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper deals with the governance of systems based on distributed ledger technology (DLT). This technology enables the creation of a shared electronic archive accessible via the internet, in which information is stored in a secure and irreversible manner. The updating and management of the ledger takes place without resorting to a trusted third party. The absence of traditional organizational and governance structures makes DLT management complex. The work provides the tools to understand DLT technology and analyzes its governance, both for open (permissionless) systems and for those with limited access (permissioned). Different approaches are suggested for the application of governance rules, including for DLT with entirely algorithmic governance. The study shows that the creation of tools known as governance tokens, which incorporate administrative and property rights, facilitates the management and control processes of DLTs. Finally, the governance structure of two DLTs is described: Ethereum and Polkadot.

Keywords: blockchain; DLT; corporate governance; algorithmic governance; governance token; crypto-asset; decentralised finance; banking and financial supervision (search for similar items in EconPapers)
JEL-codes: D82 G14 G21 G28 G3 M15 M4 O33 (search for similar items in EconPapers)
Date: 2023-06
New Economics Papers: this item is included in nep-pay
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