How The Government System For The Internet Computer Blockchain Dey Work

Published in

Blockchain Gazette

6 min readSep 6, 2023

If you check how they write the tokenomics for most blockchain projects today, you go find out say some token sometimes dey go governance. Why e be like that? How the people wey dey make decision for the Internet Computer blockchain dey work?

For this article, we go find the answer to this questions and plenty other questions wey dey. Make we start the discussion!

Wetin be on-chain governance?

The word on-chain governance mean the decisions wey group of people dey make for inside the blockchain network. Because of the way them dey make decision e don make am dey possible for people wey get token to fit join bring their own ideas and vote whether them go improve some things and change some with the help of smart contracts. The reason why them bring this system na make things dey easy, dey together, and make the community dey improve things, and this one no too dey common for other blockchain wey don dey before, wey na only few people wey them select dey make decision. Because of this special setting, the on-chain governance don become an interesting topic for blockchain matter today.

Some Reasons Why Them Dey Keep Tokens For Governance

As we don talk about before, many project plenty times dey give some of their reward token make them use am for things wey governance dey do. These tokens dey do many important things to direct the people wey dey the project.

Make we see five common reasons why them dey keep tokens for governance:

1. To encourage interest

As them dey give governance token to people wey join the network, the project dey make users, developers, and people to get interest buy and invest. E go move people wey get token to want do wetin go make the way the ecosystem dey grow better, dey stable, and safe.

2. Decision Wey Plenty People Dey Make

The governance token dey help people wey get am to join do protocol upgrade, parameter adjustment, and plan their decisions. Them dey improve decentralize governance as them dey make sure say people wey get the token, no be the few people wey them select fit choose how the network go be.

3. Community Engagement

Governance token dey make users know say them get ownership and dey part of the blockchain. If person get token, most of the time e mean say e fit make decision for the network, encourage people wey dey use the network, and fit join talk for any discussion.

4. Business design

They fit move governance tokens enter any project business design. They fit use them for transaction fee, as reward for people wey dey confirm transactions or people wey dey mine, or as way to share the rewards to people wey dey use the network.

5. To obey law

Them fit design the way them dey gather and share governance token to follow wetin the law talk. The projects fit design the way them dey sell or give token to follow the law wey government set.

As we don talk about the common reason why them dey keep tokens for governance. Make we talk more about how the Internet Computer governance design be.

The Internet Computer (IC) dey use one decentralize governance design (or decentralized autonomous organization DAO) wey them dey call the “Network Nervous System” (NNS).

The main system (DAO) wey the IC get dey allow people wey get tokens to

Lock their ICP token for “neurons”,
Vote ideas and then
Get voting rewards when you join do on-chain governance work.
Choose and give token reward to people wey dey provide nodes.

How the Internet Computer NNS governance design dey work for developers?

For developers wey join the NNS governance design, them dey use one system wey go increase or reduce their token reward amount for here (like to give something and collect am back).

How e take dey work?

Developers dey pay (or give out value) for storage and computer system (wey them dey calculate for cycles) when they give their ICP token wey dey their canister wey them don deploy.
Developers get the chance to receive reward from the the network if them be people wey dey provide nodes for the network. The reward for people wey dey provide nodes dey come every month as Special Drawing Right (SDR).

You fit learn more about the NNS reward model for here.

The NNS governance design wey we don talk about really dey fine, but no be only that one dey when we dey talk about governance for the Internet Computer. Make we talk small about the Service Nervous System (SNS), another part of the NNS.

Service Nervous System — One New Method of Decentralized Blockchain Government

The Service Nervous System (SNS) na DAO (or decentralized autonomous organization DAO) wey dey act as the third level of decentralization of dApps wey dey the ICP (Internet Computer Protocol).

How SNS dey work?

SNS na tool wey developers fit use decentralize application wey they don already create for the IC. To decentralize application for the Internet Computer no be small thing. E mean say them go start process wey go move everything wey dey the application wey dey don create go the hand of the people wey newly get the token.

We fit say wetin SNS dey do be like when one private company one start IPO (Initial Public Offering) today, but for here they go do am for on top networks of computer wey dey decentralize.

For the time wey dem dey lunch SNS, them dey give community members the chance to fit buy the dApp token to become one of the owner of the whole dApps. After them finish this step, normally, the developer go give full control of the dApps to the community members wey get token. E go good for us to know say, na for only the Internet Computer today we don see this special SNS governance system design.

“We fit say wetin SNS dey do be like when one private company one start IPO (Initial Public Offering) today, but for here they go do am for on top networks of computer wey dey decentralize.”

Important thing wey you need to know: As them design the Internet Computer on-chain governance design to dey free for people, e still get some problem. For example, some people wey get the token fit get more power if them get plenty token pass other people (we fit still call them whale wey get plenty tokens), and this one go fit cause the same old problem wey centralization get. Them never fit still stop this kind problem no be only for the Internet Computer but for the whole blockchain government.

Finally

Our discussion about the Internet Computer governance design don bring out the special way wey e dey show us decentralization wey no dey many other blockchain today. The Internet Computer governance design na proof say the blockchain community don put their mind to get place wey dey decentralize, wey them dey make decision together and to make sure say the network dey grow so that e go benefit everybody.

This story never finish. For our next article for our story, we go talk about NFTs for the Internet Computer blockchain, wetin dey special about them? See the answer for next article. Until next time, thank you as you read am, feel free to comment.

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Notice: The things wey we write for here na only for educational purpose, na the idea of the person wey write am dey inside and e no dey give any business advice. If you read this article finish, we go advice you make you do more research and you fit no agree with the idea of the person wey write am if you want. Thank you.