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By Tarek Awwad @ Sydyk
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In this series we will explore a real world use of Fully Homomorphic Encryption that can solve the limitations of the open vote system in the cosmos ecosystem. In this first part, we discuss the pros and cons of open voting systems and then we draw the overview of a possible solution.
Cosmos-based chains are far from being the only blockchains with governance mechanisms. However, one could argue that on-chain governance in the Cosmos ecosystem is among the most active in the blockchain landscape. This may be dictated by several factors which we expose hereafter.
Token stakers in Cosmos-based chains can natively vote on a wide array of protocol-related proposals, ranging from upgrades to module parameter changes (e.g., staking, distribution, minting, shared security, ICA, etc.). This range expands further when considering the plethora of application-specific decisions made in a truly decentralized environment. For instance, Osmosis—a DEX and Defi chain—has seen over 800 proposals in less than two years of operation. The vast majority of these proposals are application-related (e.g., LP incentive balancing, tokenomics, pool configuration, etc.). Beyond structured, code-executable proposals, the Cosmos SDK supports “text proposals”, allowing proposers to gauge staker sentiment on matters not directly addressable in code, such as vision, security, or codes of conduct.
A cornerstone of the Cosmos ecosystem is decentralized interoperability through the Inter-Blockchain Communication (IBC) protocol. Lacking a native, decentralized and seamless way to decide on interoperability-related questions would significantly hinder the ecosystem's ability to interconnect productively, thereby weakening this foundational pillar. For example, reviving a timed-out IBC client between two chains through off-chain processes would require extensive coordination and strong security guarantees—both of which are seamlessly handled through governance-driven code execution. Additionally, this native, omnipresent chain interoperability fosters financial dependencies or at least economic influence between chains. In some cases, this necessitates concurrent governance across multiple chains on a single subject, such as incentive matching for LP pools on Osmosis.
Governance in Cosmos is therefore a vital tool for the ecosystem. Nevertheless, it suffers from a major flaw …
Cosmos-based chains natively implement an Open Voting model, where votes are publicly visible as soon as they are cast. This approach is designed to promote transparency and accountability within a trustless environment. While anyone staking tokens on-chain can participate in governance by voting on proposals, in practice, the majority of governance actions (primarily voting) are carried out by validators. By default these validators' votes carry the weight of their stakers' tokens (a.k.a voting power). As a result, it is essential for stakers to be able to hold validators accountable for the decisions they make on their behalf. Open voting facilitates this accountability, as every vote, particularly any changes to votes, is visible to stakers and must be justifiable by the validator.
By relying mainly on the validators to vote on behalf of their stakers, governance in Cosmos mirrors the Representative Democracy model, where the people elects a group of individuals who make the decisions on their behalf. However, stakers have the option to override their validator’s vote by casting their own, which introduces an element of Direct Democracy. Cosmos Governance is therefore a hybrid model which combines two systems that traditionally operate independently and are not designed to coexist, except when applied to distinct areas of decision-making.