Cryptocurrency has come a long way since its inception, and it’s constantly evolving. Initially, mining was the most popular way to participate in the cryptocurrency ecosystem. However, as the industry has grown, governance has become an increasingly important aspect of the space. If you’re a miner looking to transition to a governance role, here’s what you need to know.
What is governance in cryptocurrency?
In the context of cryptocurrency, governance refers to the process of making decisions about how the network is run. This can include deciding on software upgrades, making changes to the network’s protocol, and managing funds.
Governance is typically handled by a group of individuals or organizations, who are chosen by the community to represent their interests. In some cases, these individuals are elected by the community, while in others, they are appointed by the project’s founders.
On-Chain vs Off-Chain Blockchain Governance: What’s the Difference?
Blockchain governance refers to the process of making decisions about how a blockchain network is run. This can include decisions about protocol upgrades, changes to network rules, and how to allocate resources. There are two main types of blockchain governance: on-chain and off-chain.
On-chain governance refers to a governance process that is built into the blockchain protocol itself. This means that decisions about the network are made using the blockchain’s consensus mechanism, which is typically based on a proof-of-work or proof-of-stake system.
With on-chain governance, stakeholders can propose and vote on changes to the network directly on the blockchain. This can include changes to the protocol, the allocation of network resources, and other important decisions.
On-chain governance has several benefits, including:
Transparency: All decisions are made on a public blockchain, so anyone can see how decisions are made.
Security: On-chain governance ensures that all changes to the network are made through a consensus mechanism that is resistant to attacks.
Efficiency: On-chain governance allows stakeholders to propose and vote on changes quickly and efficiently.
However, on-chain governance also has some drawbacks. For example, it can be difficult to reach a consensus on important decisions, and the process can be slow and cumbersome.
Off-chain governance, on the other hand, refers to a governance process that is not built into the blockchain protocol. Instead, it relies on a group of individuals or organizations who are responsible for making decisions about the network.
With off-chain governance, decisions are made through a more traditional process, such as voting or through a board of directors. This means that decisions are not recorded on the blockchain, and there is no direct connection between the governance process and the blockchain network.
Why move from mining to governance?
While mining can be a profitable way to participate in the cryptocurrency ecosystem, it can also be very competitive and requires a significant investment in hardware and electricity. Additionally, as the industry matures, mining rewards are likely to decrease, making it less attractive as a long-term option.
Governance, on the other hand, offers an opportunity to contribute to the development of the network in a meaningful way. By participating in governance, you can help shape the future of the project and ensure that it aligns with your values and goals.
How to transition to a governance role
If you’re interested in transitioning from mining to governance, here are a few steps you can take:
1. Research the project: Before you can participate in governance, you need to have a good understanding of the project you’re interested in. This includes reading the whitepaper, understanding the technology, and learning about the community.
2. Participate in the community: Once you have a good understanding of the project, start participating in the community. This can include joining forums, attending meetups, and contributing to discussions.
3. Run for a governance role: Many projects have a formal process for electing or appointing governance members. If you’re interested in serving in a governance role, find out what the process is and how you can participate.
4. Start small: If you’re new to governance, it can be helpful to start with a smaller role, such as serving on a committee or working group. This will give you an opportunity to learn more about the governance process and build relationships with other members of the community.
We take advantage of the article to take a look at the technical situation of the DeFi market, decentralized finance as a whole, the tokens that make up this crypto sub-index, for and about technical analysis, comment on the following:
As those of you who know me well know and are following my articles, and being a professional connoisseur of technical/macro/fundamental analysis and crypto onchain, I do not like to make recommendations but rather base my comments and opinions on what I observe and see, on the market situation.
In reference to AT and on the DeFi graph, I only see positive things for the future. The chances of it playing out over the long term, big move, but really big, uptrend, is 100% in my opinion. We are still at the beginning of decentralized finance and after the first big movement from 2017 to 2021, the price now, in 2023, seems to already have strong support, and from here, little by little, attack a great upward trend. This trend movement is a continuation of the previous one and in a logarithmic graph, the objectives that I see are simply incredible. I will not give figures beyond commenting that not being (opinion on the analysis) within this movement, can be a great strategic error at an economic level, if you are an investor, are a professional or are simply at home buying 100 USD of DeFi tokens.
Good luck with your investment decisions, it is not a buy recommendation and remember what was said above; we have governance in your hand, to and from there, generate more wealth in investments in crypto assets.