Crypto Governance Systems Exposed: Participation Bottlenecks and Agency Problems
Two prominent cryptocurrencies, Cardano and Solana, are testing different approaches to on-chain governance. This has exposed a weakness in crypto governance systems.
Cardano's system requires separate approval from delegated representatives (DReps) and stake pool operators for constitutional committee renewal. In contrast, Solana allows validators to cast votes using the active stake delegated to them unless individual stakers override that choice.
The current vote on both networks is showing the consequences of these approaches. Cardano's committee renewal proposal has support below the required thresholds among DReps and stake pool operators, threatening the network with a participation bottleneck.
Solana's approach reduces this risk by making validators default voting agents, but it introduces an agency problem where validators may have financial interests affected by governance proposals.