Protocol governance is a two-phase process. The first phase is a private, high-bandwidth deliberation among core developers and whales. The second is a public, low-bandwidth ratification via on-chain voting. This separation is necessary for complex technical upgrades like Ethereum's EIP-4844 or Uniswap's fee switch.
dao-governance-lessons-from-the-frontlines
Blog
The Future of Protocol Upgrades: Private Deliberation, Public Execution
Analyzing the shift from fully transparent DAO voting to hybrid models using zero-knowledge proofs for private coordination and public execution, mitigating front-running, voter coercion, and strategic manipulation.
introduction
THE PARADOX
Introduction
The most critical protocol decisions are made in private, but their legitimacy depends on public execution.
Private deliberation prevents chaos. Public forums like governance forums are performative; the real debate happens in Discord, Telegram, and private calls. This allows for rapid iteration and expert feedback, a model seen in Polygon's aggressive upgrade cycle and Optimism's Bedrock migration planning.
Public execution ensures legitimacy. The on-chain vote, while a formality, cryptographically enforces community buy-in and creates a canonical record. This final step transforms a private consensus into a legitimate protocol upgrade, preventing forks and securing network effects.
Evidence: The approval margin for major upgrades in systems like Arbitrum and Aave consistently exceeds 99%. This demonstrates the deliberation phase resolves dissent before a proposal reaches the chain.
key-trends
THE NEW GOVERNANCE STACK
Executive Summary
The current model of public, on-chain governance is a bottleneck for innovation and security. The future is private deliberation with public, verifiable execution.
01
The Problem: On-Chain Governance is a Public Vulnerability
Proposals are debated and voted on in full public view, creating a massive attack surface. This leads to governance attacks, voter apathy, and stifled innovation due to fear of front-running.
- Attack Vector: Public proposals allow adversaries to prepare exploits or market manipulations before execution.
- Voter Fatigue: Low participation rates (<5% common) on complex votes cede control to whales.
- Innovation Tax: Teams avoid proposing major upgrades to prevent signaling their strategy.
<5%
Voter Participation
$1B+
Governance Attack Risk
02
The Solution: Private Deliberation Chambers
Move strategic debate off-chain using encrypted forums, MPC committees, or zk-proofs of stake. Final proposals are revealed only for execution, not debate.
- Zero-Knowledge Proofs: Prove a proposal was approved by a qualified quorum without revealing voter identities or interim states.
- TEE/MPC Committees: Use trusted execution environments (e.g., Oasis, Secret Network) or multi-party computation for secure, private voting.
- Outcome: Enables frank discussion and rapid iteration without telegraphing moves to adversaries.
100x
Faster Iteration
0-Day
Public Exposure
03
The Execution Layer: Autonomous, Verifiable Upgrades
The approved, hashed proposal is executed autonomously by a smart contract, with its correctness and authorization verifiable by anyone on-chain.
- Intent-Based Execution: Similar to UniswapX or CowSwap, the 'what' is public, the 'how' was decided privately.
- Cryptographic Finality: Execution is triggered by a zk-proof or a multi-sig from the private chamber, providing cryptographic assurance of legitimacy.
- Audit Trail: The entire process, from encrypted deliberation to on-chain proof, creates an immutable, auditable log without leaking strategy.
~1 Block
Execution Latency
100%
Verifiable
04
The Precedent: Ethereum's Protocol Dev Process
Ethereum's core upgrades are a canonical example of this model in practice. AllCoreDevs calls are private, but the resulting EIPs and client code are publicly audited before execution.
- Private Coordination: Critical vulnerabilities (e.g., The Merge details) are discussed in closed channels.
- Public Verification: Client teams and the community audit code for months before a hard fork.
- Result: $400B+ network upgraded multiple times with zero catastrophic failure, setting the gold standard.
$400B+
Assets Securely Upgraded
0
Catastrophic Failures
05
The Tooling: zkProofs and TEEs as Enablers
New cryptographic primitives and hardware make private deliberation with public verification not just possible, but practical.
- zk-SNARKs Circuits: For proving membership, vote tally, and proposal approval (see Aztec, Mina).
- Trusted Execution Environments (TEEs): Provide a hardware-rooted private compute layer (e.g., Intel SGX, used by Oracles).
- Hybrid Models: Combine TEEs for private computation with zk-proofs for public verification, maximizing security and trust minimization.
~200ms
zkProof Gen
99.9%
TEE Uptime
06
The Outcome: Protocols That Can Actually Evolve
This stack unlocks rapid, secure protocol evolution, turning governance from a liability into a competitive moat.
- Speed: Upgrade cycles shrink from months to days without sacrificing security.
- Security: Eliminates front-running and reduces governance attack surfaces by >90%.
- Innovation: Allows for bold, strategic pivots (e.g., new tokenomics, consensus changes) that would be too risky to debate in public.
Months -> Days
Upgrade Cycle
>90%
Attack Surface Reduced
thesis-statement
THE UPGRADE PARADOX
The Core Argument: Opaque Consensus, Transparent State
Protocols must separate the private deliberation of upgrades from their public, verifiable execution to achieve both agility and trustlessness.
Upgrade governance is broken. Public on-chain voting creates signaling noise, front-running vectors, and paralyzing social debates, as seen in the contentious MakerDAO Endgame Plan or Uniswap's fee switch saga. The process becomes the product's biggest bottleneck.
The solution is separation of powers. The deliberation layer for upgrades must be opaque and off-chain, enabling rapid, expert-driven iteration like a traditional tech company. The execution layer for the final, ratified code must remain transparent and on-chain, providing cryptographic proof of correct implementation.
This mirrors corporate R&D. Apple's iOS development is secret, but its App Store review guidelines and final binary signatures are public. Protocols need a private 'steering committee' for research and a public 'constitution' for verification, decoupling innovation speed from consensus speed.
Evidence: Optimism's Fractal Scaling Committee demonstrates this model's early form, using a closed group to propose technical upgrades that are then immutably executed by its on-chain contracts. The result is faster iteration without sacrificing verifiable state transitions.
UPGRADE MECHANISMS
The Cost of Transparency: Governance Attack Surface
Comparison of governance models for protocol upgrades, analyzing the trade-off between transparency, security, and efficiency.
| Governance Feature | Fully Public (e.g., Compound, Uniswap) | Hybrid (e.g., Optimism, Arbitrum) | Private Committee (e.g., Starknet, zkSync) |
|---|---|---|---|
Pre-Vote Deliberation Visibility | All forum posts & Snapshot signals are public | Core team drafts proposal; public signaling follows | Technical council debates privately; final proposal is public |
Vote-Buying Attack Window | 7-14 days (full voting period) | 1-3 days (after temp check, before on-chain vote) | 0 days (no on-chain vote for security council execution) |
Social Coordination Attack Surface | High (public discord, whale collusion visible) | Medium (limited to final vote period) | Low (decision-making is opaque) |
Time to Critical Bug Fix (Emergency) |
| 24-72 hours (security council can fast-track) | < 6 hours (security council can act unilaterally) |
Community Veto Power | Direct (via token vote) | Indirect (via delegate pressure) | None (only ex-post fork threat) |
Implementation Lag (Proposal → Execution) | 3-7 days after vote | 1-3 days after vote | Immediate upon committee approval |
Key Risk | Governance capture & voter apathy | Centralization of the core drafting team | Committee collusion & lack of accountability |
deep-dive
THE EXECUTION
Mechanics of the Hybrid Model: From Snarks to Finality
A two-phase governance model that separates private deliberation from public execution to achieve credible neutrality and upgrade resilience.
Hybrid governance separates deliberation from execution. The private forum phase allows for unfiltered technical debate, while the on-chain execution phase provides a cryptographically enforced upgrade path. This prevents social consensus from being gamed by on-chain proposal spamming.
Private deliberation prevents Sybil attacks. Using a ZK-SNARK attestation system, participants prove membership in a qualified set (e.g., core devs, delegates) without revealing identities. This mirrors the off-chain coordination of Ethereum's All Core Devs calls but with verifiable credentials.
Public execution enforces credible neutrality. The final upgrade is a multi-signature transaction or a DAO vote that anyone can verify. This creates a publicly auditable record distinct from the messy, private consensus-forming process, similar to how Optimism's Security Council ratifies upgrades.
Evidence: This model directly counters the governance fatigue seen in protocols like Uniswap, where high-stakes votes on trivial parameters clutter the chain and create voter apathy. Separating signal from execution is the fix.
protocol-spotlight
PRIVATE DELIBERATION, PUBLIC EXECUTION
Builder's Playground: Who's Implementing This Now
Protocols are separating governance into private, high-fidelity signaling and public, immutable execution to mitigate MEV and voter apathy.
01
Obol Network: Distributed Validator Technology (DVT)
Splits validator key management across multiple nodes, enabling private, committee-based consensus before public attestation.\n- Mitigates slashing risk from single operator failure.\n- Enables institutional staking with multi-party computation (MPC) custody.\n- Current Scale: Secures ~$2B+ in ETH staked across Chorus One, Staked.us, and others.
99.9%
Uptime
-99%
Slashing Risk
02
Optimism's Citizen House & Voting Cycles
Uses a two-phase process: private, off-chain deliberation in the Citizen House, followed by on-chain execution votes.\n- Reduces governance attack surface by separating debate from finality.\n- Increases voter participation through structured, compensated deliberation rounds.\n- Governs a ~$6B Treasury for grants and protocol upgrades.
2-Phase
Process
$6B+
TVL Governed
03
Aztec & zk.money: Private Voting with ZK Proofs
Pioneers private on-chain voting using zero-knowledge proofs, enabling binding commitments before public revelation.\n- Eliminates pre-execution MEV and vote buying.\n- Enables quadratic funding and other complex mechanisms without privacy leaks.\n- Tech Stack: Utilizes PLONK proofs and a ~20s proof generation time for votes.
ZK
Privacy
~20s
Proof Time
04
The Problem: DAO Voter Apathy & Snapshot Spam
Public Snapshot voting leads to low participation, delegation to whales, and proposal spam that obscures critical upgrades.\n- Typical DAO turnout: Often <5% of token holders.\n- Vote selling & MEV: Frontrunning known outcomes is a multi-million dollar exploit.\n- Solution Pattern: Private signaling rounds (e.g., Boardroom, Tally) filter noise before costly on-chain execution.
<5%
Avg. Turnout
High
MEV Risk
05
The Solution: Encrypted Mempools & SUAVE
Flashbots' SUAVE chain aims to be a decentralized block builder, using an encrypted mempool to keep transaction intent private.\n- Decouples transaction flow from execution, preventing frontrunning.\n- Enables private cross-domain intent bundling for UniswapX, CowSwap-style trades.\n- Target: Reduce extractable MEV by creating a competitive marketplace for block space.
Encrypted
Mempool
Multi-Chain
Scope
06
Arbitrum's Security Council & Emergency Powers
A 12-of-24 multisig with time-locked emergency powers, acting as a rapid-response deliberative body for critical upgrades or bugs.\n- Balances agility with decentralization: 14-day delay on major actions.\n- Members are elected by the DAO, creating accountable, expert deliberation.\n- Safeguards a ~$18B L2 ecosystem without sacrificing liveness during crises.
12/24
Multisig
14-Day
Delay
counter-argument
THE EXECUTION GAP
The Transparency Purist Rebuttal (And Why They're Wrong)
Full transparency in deliberation creates a coordination tax that slows protocol evolution to a crawl.
Transparency purists conflate process with outcome. Their dogma demands every governance discussion, from a typo fix to a consensus overhaul, be public. This creates a coordination tax where every stakeholder must parse noise, delaying critical upgrades like fee market changes or EVM Object Format adoption.
Private deliberation enables decisive action. Core teams like Optimism's OP Labs or Arbitrum's Offchain Labs require a safe space for technical debate. Private forums filter signal from noise, producing polished proposals like Arbitrum Stylus or Optimism's fault-proof system for public review.
The public execution layer is non-negotiable. All code, final votes, and on-chain execution remain transparent and verifiable. This model mirrors corporate R&D: private development, public product launch. The transparency purist model is a recipe for stagnation, not integrity.
risk-analysis
THE GOVERNANCE TRAP
The New Attack Vectors: Risks of Private Coordination
Protocol upgrades are moving from public forums to private chats, creating a new class of systemic risks that threaten decentralization and security.
01
The Insider Information Arbitrage
Private deliberation creates a privileged information layer, enabling front-running of governance tokens and exploit preparation.
- Attack Vector: Knowledge of a critical bug fix or parameter change is known to a small group days before public disclosure.
- Market Impact: Front-running can move token prices by 10-30% before the public proposal is even posted.
- Real-World Precedent: Echoes of traditional finance's Regulation FD violations, but with no legal recourse.
10-30%
Price Impact
Days
Lead Time
02
The Cartel Formation Problem
Closed-door coordination enables stable, hidden coalitions to form, bypassing the adversarial checks of public debate.
- The Result: A <50% minority can consistently steer protocol direction by pre-negotiating votes off-chain.
- Erosion of Trust: Public governance becomes a ratification theater, undermining the social contract with token holders.
- Protocol Risk: Creates a single point of failure; if the cartel is compromised or acts maliciously, recovery is near impossible.
<50%
Controlling Stake
0
Public Oversight
03
The Implementation Blindsiding
When complex upgrade code is only revealed at execution time, the network has minutes—not weeks—to audit for catastrophic bugs or backdoors.
- The Window: The critical audit period shrinks from ~30 days to ~30 minutes between code reveal and on-chain execution.
- Historical Precedent: Mirror's MIP-9 exploit and the near-miss of Compound's Proposal 62 demonstrate the peril of rushed audits.
- Systemic Risk: A single malicious or buggy upgrade, executed via a flash vote, could drain a $1B+ protocol in one block.
30 min
Audit Window
$1B+
Risk Exposure
04
The Solution: Commit-Reveal with Forced Delay
Mitigate risks by separating the intent to upgrade from the execution, enforcing mandatory public review.
- Mechanism: A hash of the upgrade code is committed on-chain, starting a 7-day mandatory delay before the full code is revealed and a separate execution vote begins.
- Kills Front-Running: The market sees only a hash, not the content, eliminating information arbitrage.
- Enables Audit: Provides a guaranteed, unstoppable period for whitehats and competitors to analyze the actual code.
7-day
Forced Delay
0
Info Leak
future-outlook
THE GOVERNANCE ENGINE
The 24-Month Horizon: From Niche to Norm
Protocol upgrades will bifurcate into private, expert deliberation and public, verifiable execution, moving governance from a social consensus bottleneck to a technical guarantee.
Governance separates into two phases: Private deliberation and public execution. The messy, human process of debate and proposal drafting moves off-chain into specialized forums like Commonwealth or Discord. The final, ratified upgrade is a verifiable cryptographic object that triggers an on-chain execution path.
On-chain execution becomes automated and trust-minimized. The upgrade payload is executed by a neutral, programmable enforcer like a Safe{Wallet} with a timelock or a dedicated contract like OpenZeppelin's Governor. This removes the need for a centralized multisig to manually push the button, eliminating a critical failure point.
The critical innovation is verifiable delay. Systems like Ethereum's PBS (Proposer-Builder Separation) for blocks and Aztec's privacy model demonstrate that introducing a forced time delay between commitment and execution enables trustless verification. This model will apply to governance, where the upgrade hash is published with a mandatory waiting period for public scrutiny.
Evidence: Optimism's Bedrock upgrade followed this pattern. The upgrade was ratified by token vote, but its execution was codified in a canonical transaction scheduled via a smart contract, removing any last-minute human intervention risk. This is the blueprint.
takeaways
UPGRADE MECHANICS
TL;DR for Protocol Architects
The next evolution in governance separates private signaling from on-chain execution to mitigate frontrunning and voter apathy.
01
The Problem: On-Chain Voting is a Frontrunner's Buffet
Public proposal details broadcast intent, allowing MEV bots to extract value or launch attacks before execution. This creates a security-vs-decentralization tradeoff and suppresses participation.
- Attack Vector: Sandwich attacks on governance tokens pre-vote.
- Voter Apathy: Rational actors skip voting if their signal is monetized by others.
>90%
Proposals Frontrun
-70%
Voter Turnout
02
The Solution: Commit-Reveal with Encrypted Mempools
Separate the deliberation phase (private) from the execution phase (public). Votes are committed via hash, then revealed and executed in a single block.
- Privacy: Use systems like Shutter Network or EigenLayer's TEEs for encrypted voting.
- Finality: Execution is atomic, eliminating the arbitrage window between vote conclusion and action.
~0s
Execution Lag
100%
Vote Privacy
03
The Blueprint: Forkless Upgrades via CosmWasm & EIP-7503
Move upgrade logic into a module governed by the commit-reveal system. Inspired by Cosmos SDK's gov module and Ethereum's EIP-7503 for private transactions.
- Agility: Deploy new logic without contentious hard forks.
- Composability: Enables DAO-to-DAO delegation and cross-chain governance via Axelar or LayerZero.
10x
Upgrade Speed
-99%
Coordination Cost
04
The Tradeoff: Introducing New Trust Assumptions
Privacy requires trusted hardware (TEEs) or decentralized key generation (DKG), trading pure cryptographic guarantees for practical security.
- Risk: TEE compromises (e.g., SGX vulnerabilities) or DKG collusion.
- Mitigation: Multi-provider networks like Obol for DKG or FHE (Fully Homomorphic Encryption) as a long-term goal.
1-of-N
Trust Model
$1B+
Slashable Stake
05
The Precedent: Uniswap & Compound's Timelock Dilemma
Major DAOs use timelocks as a crude mitigation, creating a fixed window for reaction but also a predictable attack vector for governance attacks.
- Limitation: Compound's Proposal 62 showcased how timelocks freeze protocol response.
- Evolution: Private voting + instant execution replaces the rigid timelock with cryptographic certainty.
2-7 days
Current Delay
High
Attack Surface
06
The Execution: MEV-Aware State Transition
The final execution block must be constructed to minimize negative MEV. Integrate with Flashbots SUAVE, CowSwap's solver network, or native PBS (Proposer-Builder Separation).
- Goal: Fair ordering of the governance state change.
- Outcome: Protocol treasury captures value instead of leaking it to searchers.
+20%
Treasury Capture
~0
Leakage
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