Vulnerabilities that arise from poor governance in Distributed Ledger Technologies

TL;DR

This paper examines how poor governance in Distributed Ledger Technologies creates vulnerabilities like centralization and malicious exploits, emphasizing the need for robust governance frameworks to ensure fairness, security, and societal trust.

Contribution

It provides a comprehensive taxonomy of governance properties, identifies critical vulnerabilities, and suggests technical solutions to improve DLT governance practices.

Findings

Identifies key vulnerabilities due to governance flaws

Proposes a taxonomy of governance properties for DLTs

Highlights technical solutions for enhancing governance

Abstract

Distributed Ledger Technologies (DLTs) promise decentralization, transparency, and security, yet the reality often falls short due to fundamental governance flaws. Poorly designed governance frameworks leave these systems vulnerable to coercion, vote-buying, centralization of power, and malicious protocol exploits: threats that undermine the very principles of fairness and equity these technologies seek to uphold. This paper surveys the state of DLT governance, identifies critical vulnerabilities, and highlights the absence of universally accepted best practices for good governance. By bridging insights from cryptography, social choice theory, and e-voting systems, we not only present a comprehensive taxonomy of governance properties essential for safeguarding DLTs but also point to technical solutions that can deliver these properties in practice. This work underscores the urgent need for robust, transparent, and enforceable governance mechanisms. Ensuring good governance is not merely a technical necessity but a societal imperative to protect the public interest, maintain trust, and realize the transformative potential of DLTs for social good.