Blockchain governance holds the key to establishing trust, ensuring compliance, and fostering innovation on public networks. With the surge of interest in asset tokenization, understanding how governance works on Polymesh to support regulated real world assets is vital.

This blog post explores the details of Polymesh governance, its key stakeholders, and the mechanisms that ensure the network’s integrity and compatibility with regulatory requirements. 

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Understanding Polymesh’s unique onchain governance model

Polymesh’s industry-leading governance model provides an environment for security tokens that’s compatible with legal frameworks and regulatory requirements. 

Governance on Polymesh is built to be transparent and effective, with various stakeholders ensuring a balance between maintaining order and embracing progressive changes. 

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Governance: essential for blockchain integrity

Governance dictates the correct direction of the blockchain and ultimately drives its evolution. Effective governance addresses issues such as contentious forks, which present legal and tax challenges, especially for tokens representing real world assets. 

Polymesh harnesses an industry-leading governance model designed to navigate through potential disagreements with minimal disruption to the chain and its participants. 

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The challenge of blockchain governance

Governance is particularly challenging for asset tokenization on public networks. Due to the decentralized nature of the technology, these networks can fork into distinct entities during disagreements, creating legal and tax headaches for participants and regulators alike. 

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Polymesh’s onchain governance model

Polymesh has governance functions built into its protocol layer, allowing governance to take place onchain with minimal disruption to the network’s users. Its design permits forkless upgrades to prevent hard forks, while a Governing Council acts as a steward to guide the chain and solve disagreements, should any arise. Feel at ease knowing that the blockchain won’t change arbitrarily and stolen assets can be recovered. 

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Decision-making within the Polymesh ecosystem

Polymesh’s governance framework is strategic and democratic. Any POLYX token holder can show support (or dissent) for potential changes before key decisions are voted on by the primary governing body, the Governing Council. 

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Key stakeholders in Polymesh governance 

Stakeholders are the backbone of Polymesh’s decision-making process. They range from POLYX token holders to institutional participants who collaborate to steer the network toward collective goals.

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POLYX token holders 

POLYX token holders can propose and signal their support for Polymesh Improvement Proposals (PIPs). Each POLYX token holder has the power to submit a proposal or signal support or dissent on proposals from others by bonding POLYX to the proposal.

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Committees

Committees may have up to 20 members and specialize in specific areas, such as technology changes (Technical Committee) and chain upgrades (Upgrade Committee). Committees present PIPs that, unlike community-curated PIPs, are directly actionable by the Governing Council. 

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Governing Council: the central body of decision-making

As the central decision-making body on Polymesh, the Governing Council oversees the blockchain, establishes consensus, and guides development direction. The Governing Council has the authority to expedite proposals and manage committee memberships, including its own.

Membership across Committees and the Governing Council is not currently mutually exclusive, meaning individuals may serve both simultaneously. This is designed to foster a collaborative environment for Polymesh’s early stages. 

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Tackling governance challenges 

Navigating the complexities of governing a public network is no small feat. Public blockchains are decentralized, meaning no one entity can make decisions for the network. For many networks, stakeholder consensus has proven incredibly difficult, resulting in disagreements threatening the networks’ longevity and overall growth. 

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Offchain governance 

Governance mechanisms can be onchain or offchain. Offchain governance occurs when decision-making (including protocol development) takes place through informal discussions, such as at conferences, in online forums, through mailing lists or by other means. Offchain governance only functions well when stakeholders can achieve complete consensus and make relevant updates and implementations in sync. Otherwise, the network is liable to fork (split) into two distinct chains each running a different version of the network. 

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Onchain governance

Polymesh governance is onchain, with stakeholders signaling support for or voting on proposals directly with the native token, POLYX. With onchain governance, decision-making occurs via transactions on the network (although discussion and debate can occur offchain, as with offchain models). 

Onchain governance bears significant similarity to staking. Just as stakers bond POLYX to node operators to nominate them in staking, token holders bond POLYX to PIPs to signal support (or dissent).

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Permissioned blockchain

As a public permissioned blockchain, Polymesh has elements of centralization that provide the network with control mechanisms necessary to navigate the evolving regulatory landscape. 

Governance on Polymesh covers the permissioning of the network, including:

• Node operators: the licensed financial entities permitted to run operator nodes, which gather transactions into blocks for voting and writing to the blockchain 
• Customer due diligence providers: the entities permissioned to perform identity verification for Polymesh users, a key component of regulatory-compliant issuance and settlement 

Permissioned entities are always known and must be approved by the network users via onchain governance. 

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Technical mechanisms 

Complimenting Polymesh’s onchain governance model are technical mechanisms that work to prevent hard forks and unwanted transactions. These include: 

• Upgrade process: Nodes automatically update to the latest version, making non-malicious hard forks highly improbable
  
  
• Substrate framework: Enables forkless upgrades and on-chain recording, so platforms and nodes can keep operating with minimal disruption
  
  
• WebAssembly (WASM): Reduces the chances of hard forks resulting from compilers or virtual machines, letting platforms and webpages using them maintain high-performance

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Conclusion

Polymesh offers a leading governance model that provides robustness and efficiency to the network necessary for asset tokenization. Its clear, transparent governance framework instills trust, fosters compliance, and drives innovation in digital assets. 

As blockchains continue to evolve, so too will governance mechanisms. Designed for regulatory compatibility, Polymesh offers an environment for security tokens where governance is adaptive and responsive to these future changes. 

By demystifying the governance process, we hope this exploration provides a clearer understanding of the platform’s role in the broader tokenization landscape. To dive deeper into Polymesh governance, visit polymesh.network/governance.