The governance of blockchains and systems based on distributed ledger technology

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

LIUC Papers in Economics from Cattaneo University (LIUC)

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 a conceptual framework 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 describes the difference between management and governance tokens, having respectively administrative and property rights, which facilitate the direction and control of DLTs. Finally, the governance structure of two DLTs is described: Ethereum and Polkadot.

Pages: 45 pages
Date: 2024-04
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Published in Università Cattaneo Working papers n.17 2024

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Persistent link: https://EconPapers.repec.org/RePEc:liu:liucec:2024-17

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