Private Governance

Ensures individual voting choices are confidential, preventing coercion and vote-buying. This is achieved through cryptographic techniques like zero-knowledge proofs or commit-reveal schemes.

• Example: A DAO member can prove their vote was counted correctly without revealing which proposal option they selected.
• Purpose: Protects voter autonomy and allows decisions based on genuine preference rather than social pressure.

Conceals the amount of governance tokens or voting power held by individual participants.

• Mechanism: Uses zk-SNARKs or similar technology to prove ownership of a sufficient stake without disclosing the exact balance.
• Benefit: Prevents targeted attacks on large stakeholders (whales) and reduces information asymmetry that could be exploited in governance attacks.

Allows the content of governance proposals to be kept private until a vote is concluded or a specific milestone is met.

• Use Case: Essential for sensitive strategic decisions, such as merger talks, treasury allocations for undisclosed partnerships, or security vulnerability disclosures.
• Implementation: Often involves encrypted proposal payloads that are only decrypted after a successful vote or via a multi-party computation (MPC) protocol.

Cryptographic tools that enable private governance by revealing only the necessary information.

• zk-SNARKs/zk-STARKs: Prove a voter is eligible (e.g., holds >X tokens) without revealing their identity or exact balance.
• Ring Signatures: Allow a member of a group to sign a transaction/vote, proving authorization without revealing which specific member signed. These are foundational for implementing the three privacy dimensions.

A practical implementation of private governance principles on a ZK-Rollup.

• Private Voting: Aztec's early governance models explored using zero-knowledge proofs for confidential voting on protocol upgrades.
• Shielded Participation: Users could interact with governance contracts from private, shielded accounts, decoupling their public identity from their governance actions.

Implementing private governance introduces significant design complexities.

• Auditability vs. Privacy: Verifying the integrity of a vote count without seeing individual votes requires sophisticated cryptographic audits.
• Sybil Resistance: Must be carefully designed to prevent an attacker from creating many anonymous identities to sway votes.
• Implementation Overhead: Adds computational cost and complexity compared to transparent, on-chain voting systems like Snapshot or Compound Governance.

A two-phase cryptographic protocol used to hide votes during the voting period and reveal them afterward. The process is:

1. Commit Phase: Voters submit a cryptographic hash (commitment) of their vote, binding them to their choice without revealing it.
2. Reveal Phase: After the voting period ends, voters submit their original vote and a secret salt to open the commitment.

This prevents front-running and strategic voting based on early results, as votes are hidden until the reveal. It's a simpler PET but requires active participation in both phases.

Techniques that allow governance systems to verify unique personhood or stake without exposing personal identity. This is critical for one-person-one-vote systems and includes:

• Zero-Knowledge Proofs of Personhood: Proving membership in a unique-human set (e.g., via World ID) without a centralized database.
• Anonymous Credentials: Using ZKPs to prove you hold a specific NFT or token qualifying you to vote, without revealing which one.
• Private Airdrops & Reputation: Distributing voting tokens or reputation scores based on private on-chain activity history.

Implementing private governance involves navigating significant technical and practical trade-offs:

• Complexity & Cost: ZKPs and FHE computations are computationally expensive, increasing gas costs and complexity.
• User Experience: Requiring users to manage secrets, participate in multiple phases, or run client-side proofs creates friction.
• Verifiability vs. Privacy: Maximizing privacy can obscure audit trails, creating tension with the need for transparent, verifiable outcomes.
• Collusion Resistance: While private voting prevents some coercion, advanced schemes like MACI are needed to mitigate collusion and bribery on the input side (i.e., before the vote is cast).

The primary security risk of private governance is the centralization of decision-making authority. This creates a single point of failure where a small group can:

• Unilaterally alter protocol rules or parameters.
• Censor transactions or users.
• Misappropriate treasury funds. This concentration contradicts the decentralized security model of the underlying blockchain, reintroducing trust assumptions.

With a limited number of validators or council members, the risk of collusion increases significantly. Entities can form voting cartels to:

• Extract maximum value (MEV) at the expense of regular users.
• Freeze assets or reverse transactions for their benefit.
• Stifle protocol upgrades that threaten their influence. This undermines the protocol's neutrality and fairness.

Private governance often relies heavily on the expertise and integrity of a few core individuals. This creates key person risk, where the project's security and direction are vulnerable to:

• A founder or lead developer leaving or becoming unavailable.
• The compromise of a single member's private keys.
• Poor decision-making by a non-diverse, insulated group. The system's resilience is tied to human factors rather than cryptographic and economic guarantees.

Decision-making in private governance models frequently occurs off-chain in private chats or meetings. This lack of on-chain transparency leads to:

• Opaque proposal processes that exclude the community.
• Difficulty in auditing the rationale behind critical decisions.
• No clear mechanism for holding decision-makers accountable for malicious or negligent actions. This obscurity can erode trust and lead to contentious hard forks.

When a private governing body pushes a contentious upgrade, it can trigger a chain split or contentious hard fork. Security challenges include:

• Replay Attacks: Transactions being valid on both the old and new chains.
• Validator Divergence: The network's validating power splitting, weakening both chains.
• Community Fragmentation: Dividing developer resources and user liquidity, reducing overall ecosystem security.

A clearly identifiable, centralized governing body presents a larger legal attack surface. Regulators can more easily:

• Target the entity with lawsuits or enforcement actions.
• Compel the group to implement censorship (e.g., OFAC sanctions).
• Hold members personally liable for protocol outcomes. This contrasts with the regulatory resistance of credibly neutral, decentralized systems like Bitcoin.

Private governance prioritizes certain attributes at the expense of others, creating clear trade-offs:

• Speed & Efficiency: Decisions can be made rapidly by a small, coordinated group.
• Accountability & Transparency: While operations may be transparent to members, they lack the public verifiability of open governance.
• Censorship Resistance: The governing body can censor transactions or participants, which may be a feature (for compliance) or a critical flaw (for credibly neutral systems).
• Single Points of Failure: Reliance on a known set of entities introduces legal and operational risks if they are compromised or collude.

A governance mechanism proposed by Robin Hanson where prediction markets are used to make decisions. Voters bet on the outcome (e.g., token price) of different policy proposals, and the market-determined optimal policy is implemented.

• Principle: "Vote on values, bet on beliefs."
• Status: Largely theoretical in blockchain, with few live implementations.