Blockchain governance is hard to pull off. The EOS platform for instance uses a voting mechanism to determine how the platform evolves. The problem? Hardly anyone can be bothered to vote on issues of importance, such as removing the high rate of inflation. Voting turnout peaks at just 2.5 percent of the network.
That could have created an existential crisis since its constitution required a minimum turnout of 15 percent. But the requirement was ultimately scrapped when it became clear voter turnout would fall so far short.
In contrast, Cosmos—which recently burst into the top 20 coins by market cap—seems to be making it work. It is a protocol for building proof-of-stake blockchains built on Tendermint software. It hopes to make it easier for developers to build blockchains for applications they are working on. It has its own token, called ATOM.
Tendermint is a for-profit company that builds blockchain software and is responsible for the development of Cosmos. Christine Chang, director of community for Tendermint said Cosmos has a constitutionally mandated quorum of 40 percent turnout but that, typically, around 90 percent of stakers vote.
So what’s working so well here?
Chang said that building a proof-of-stake blockchain required a highly engaged community from the start. The project was so challenging that everyone had to communicate regularly via chat groups and other means of communication.
“Everyone wants strong ownership of what’s happening to the network. If you’re an active participant you decide the fate of the network,” she told Decrypt.
Join Startup 3.0
Enter your email for weekly highlights from Web 3.0’s startup world!
In fact, she pointed out that the governance system had to reach a fairly high level of engagement to activate the network in the first place. The entire community was incentivized to participate in the first few votes—and that created a kind of habit, putting them in the right mindset to continue voting.
Chang said, “For one month, everyone was talking about ‘are we ready to enable ATOMs?’ Then the moment the proposal came out, everyone showed up, saying, ‘let’s enable this, I want to trade my ATOM’s’.”
So, the trick is to get governance in place before the token sale, not after.