Vulnerabilities that arise from poor governance in Distributed Ledger Technologies
Aida Manzano Kharman, William Sanders
TL;DR
This paper analyzes governance in Distributed Ledger Technologies (DLTs), arguing that poor governance enables coercion, vote-buying, centralization, and exploitative protocol updates, thus threatening decentralization and public trust. It presents a qualitative methodology to identify vulnerabilities, define governance properties, and link gaps to concrete attacks, drawing on cryptography, social choice theory, and e-voting. The authors offer a taxonomy of governance properties, a vulnerability framework, and technical guidance for implementing robust, transparent, and enforceable governance mechanisms, supported by a cross-DLT evaluation. The work highlights the societal stakes of DLT governance and calls for standardization, scalable solutions, and interdisciplinary collaboration to align governance with public-interest objectives and social good.
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.