Many people perceive decentralization only at the level of network consensus where decisions are made about adding new blocks to the blockchain. This is only the most visible part that is often talked about and is to some extent measurable. Decentralization is based on software that block producers (pool operators) and other participants install on their computers. All software contains bugs and must be updated and upgraded. Who has the right to decide on changes to the source code? Bug fixes and new features are implemented by the team. Clearly, if decentralization is software dependent, there must be some mechanism to make changes to the source code in a transparent and ideally decentralized manner. Staking allows you to delegate ADA coins to a pool you trust to produce blocks on your behalf. Decentralized governance will allow ADA coin holders to make decisions about the Cardano project.
- Whoever funds the development also decides what to work on.
- External funding of protocol development could be dangerous as non-transparent and shady power structures could emerge.
- Cardano will be a self-sustaining system thanks to a project treasury.
- Once the community is able to propose and vote on Cardano improvement proposals (CIPs) it will become fully decentralized and essentially independent of the IOG leadership team.
- Skin in the game is a very important aspect of voting.
- IP-based voting cannot work since one entity can allocate a large number of IP addresses.
- ADA coin holders can participate in governance without having to run their own full nodes.
- Having no governance goes against the principle of decentralisation.
Read the article: ADA and power | Cardano Explorer