Why DePIN Governance Must Prioritize Security Over Speculation

Governance proposals for security upgrades are voted down by speculators who prioritize short-term token buybacks. This creates a structural underinvestment in core infrastructure.

• Result: Critical bug bounties and audits are underfunded by >50% vs. competitor networks.
• Trend: Governance forums show ~70% of proposals for treasury allocation are for marketing, not security.

Anchor voting weight to proven, active hardware contributions, not just token holdings. Projects like Helium and Render Network are exploring this via Proof-of-Physical-Work.

• Mechanism: 1 vote per verified, online node, capped to prevent Sybil attacks.
• Outcome: Aligns governance with operators who bear the real-world cost of network failures.

Implement on-chain treasury rules that automatically allocate a minimum percentage (e.g., 20%) of protocol revenue to a dedicated, multi-sig secured security fund. Inspired by Compound's and Aave's risk frameworks.

• Rule: Automated funding for audits, incident response, and hardware insurance pools.
• Barrier: Removes the security budget from the whims of speculative governance votes.

Speculative token markets allow attackers to cheaply rent voting power, threatening the integrity of physical infrastructure like network upgrades or slashing decisions.\n- Attack Cost: Borrowing voting power for a $1B network can cost <$100k.\n- Real-World Consequence: A malicious vote could brick millions of devices or censor data feeds.

Anchor voting power to verifiable, non-financialized work like uptime, data served, or compute contributed. This aligns governance with operators who have skin in the game.\n- Sybil Resistance: Creating a fake node has hardware and operational costs.\n- Protocol Examples: Helium's (now Nova Labs) Proof-of-Coverage, Filecoin's storage provider consensus.

Multisig wallets and slow upgrade timelocks create operational risk. A 7-day delay to patch a critical sensor firmware vulnerability is unacceptable.\n- Response Lag: Governance cycles often take days to weeks.\n- Opaque Control: Multisig signers are often anonymous, creating a centralization backdoor.

Delegate specific, time-sensitive operational decisions (e.g., firmware updates) to a small, KYC'd committee of experts with enforceable legal liability. Use on-chain governance only for high-level parameter changes.\n- Speed: Critical patches can be deployed in hours, not days.\n- Accountability: Committee members are legally identifiable entities, not pseudonymous keys.

DePIN protocols amass significant token treasuries for grants and incentives. Financialized governance turns these funds into targets for mercenary capital seeking to drain them via proposals.\n- TVL at Risk: Early-stage DePIN treasuries can hold >$50M in native tokens.\n- Misdirected Funds: Proposals favor short-term token pumps over long-term network health.

Replace lump-sum grants with continuous, verifiable fund streams tied to provable physical work metrics. Implement vote-escrow (veToken) models where voting power decays if work metrics aren't met.\n- Payout Alignment: Operators are paid for work done, not promises made.\n- Protocol Inspiration: Sablier streams, Curve's veToken model adapted for physical work.

Governance tokens held by passive speculators create a security-critical attack surface. A hostile actor can acquire a cheap voting majority to pass malicious proposals, like draining a community treasury or altering hardware verification rules.

• Attack Cost: Often just $10M-$100M for mid-tier DePINs.
• Consequence: Physical network integrity is compromised by financial games.

Tie voting power directly to proven, active contribution to the physical network. This aligns governance with operators who have skin in the game.

• Mechanism: 1 vote per verified, online hardware unit (e.g., a Helium hotspot).
• Benefit: Attackers must control physical infrastructure, raising the cost to $100M+ and making attacks logistically impossible to hide.

Protocol treasuries funding hardware grants and R&D become prime targets. A single governance exploit can drain years of accumulated fees, crippling network growth and operator incentives.

• Scale: Top DePIN treasuries hold $100M+ in native tokens and stablecoins.
• Vulnerability: Standard multi-sigs and timelocks are insufficient against a captured governance process.

Adopt a streaming finance model like Sablier or Superfluid for treasury disbursements. Approved budgets are dripped over time and are non-transferable, automatically revoking unused funds.

• Mitigation: Limits the damage of any single malicious proposal to a short-term drip.
• Accountability: Creates natural checkpoints to halt malicious streams.

DePINs rely on oracles (e.g., Chainlink, Pyth) for critical data like hardware uptime and location. If governance can arbitrarily change oracle parameters or whitelists, it can falsify proofs and mint rewards fraudulently.

• Impact: Undermines the entire Proof-of-Physical-Work model.
• Precedent: See Solana DePIN hacks where oracle reliance was exploited.

Enshrine the network's core oracle logic and hardware verification rules in immutable smart contracts. Governance should only control upgradable periphery, like fee parameters. This enables a healthy fork if governance is captured, preserving the physical network's operational layer.

• Framework: Inspired by Ethereum's credibly neutral base layer.
• Result: Speculators can fork the token; operators fork the working network.