Blockchain On-chain governance is currently one of the most discussed concepts in the blockchain universe. I understood as I read it that the way it works and the reason why people participate differently is highly essential to any person with interests in the decentralized systems.

On-Chain governance can be simply explained as the system in which the participants of the blockchain can vote on decision making like upgrading of protocols, changing rules of the network, or distribution of funds. On-chain governance is guaranteed to be decentralized and opaque, unlike the traditional organizations where a small group makes the decisions.

Financial rewards are one of the primary reasons of engaging in on-chain governance. Numerous blockchain initiatives provide users with tokens or voting rights when they engage in governance. An example is that certain platforms can give users an additional token when they vote on proposals or lower the cost of transaction to active voters.

This will help to boost the participation of people. I observed that these stimuli are founded on the assumption that individuals react to rewards which holds in economics and psychology. However, as much as rewards invite players, it also poses a problem; not all players do so.

One of the largest issues of on-chain governance is participation inequality. Research indicates that in most decentralized initiatives, there is less than 10 per cent of token owners who actively participate in voting and the rest 90 per cent do not turn up. This implies that key decisions are made by a few users.

This inequality is caused by multiple factors as I examined this. To begin with, ignorance is one of the significant causes. Most of the users have got tokens but they are not aware of the proposals or what their votes mean. Second, it takes time and effort to be engaged, and not everyone will have it. Third, other participants might be the bearer of a token primarily as an investment and are not interested in the decision-making of the governance.

The other factor of importance is the allocation of voting power. Most blockchain projects are such that voting power depends on the amount of tokens. This implies that the rich participants automatically have greater power whereas the small holders do not exert much influence.

This system will recreate the centralized structures unintentionally, even in a decentralized network. The fact that, despite the promises of equality and decentralization, the blockchain usually provides inequality in participation was interesting to me.

Scientific works in the economics of blockchain justify that incentives to voters may not be the solution to inequality. Although money is a motivator to some users it fails to fill in knowledge gaps and lack of time. Delegation models are already being employed by some projects, in which small holders may delegate their voting rights to other people within the community they trust. This minimizes inequality and the decision-making process is more balanced.

The relevant applications to the Nigerian blockchain enthusiasts are to educate themselves through the reading of proposals, discussions of project and to learn the implications of votes before taking part. Knowledge is power. Vote: even small token holders can do it in case they vote regularly.

Delegation can be considered when there is a lack of time or knowledge, and the community should be motivated to learn more by sharing information with friends or in local blockchain communities. Lastly, strike a balance between risk and reward: as much as governance incentive is appealing, there is no time to make decisions, based on reward alone. Pay attention to the health of the long-term projects.

Finally, on-chain governance is an effective tool of decentralized decision making yet it suffers actual constraints of inequality in participation. The incentives would not be enough to ensure a fair engagement, education, time, and considerate delegation are also needed. In my reading into this subject, I came to an understanding that everyone who is a Nigerian or a blockchain enthusiast needs to be an initiator in his or her learning and involvement.

It is only at this point that decentralized systems can identify their objective of fairness, transparency and growth that are community based. Knowing about incentives and inequality, we will be able to turn blockchain governance not only into a concept, but also a working practice used by all.