“Decentralized Blockchain Governance and Collusion: An Empirical Analysis of a Blockchain Platform ” by Mr. Sailendra Prasanna Mishra
Mr. Sailendra Prasanna Mishra
Ph.D. Candidate in Information Systems
Naveen Jindal School of Management
The University of Texas at Dallas
Many blockchain platforms delegate governing power to their users, enabling decentralized governance. This study shows how a vote-based governance mechanism in blockchain platforms can have undesired coordination among users. We look into Steemit, a blockchain-based social media platform, where users (authors) publish articles to earn tokens based on the votes received from other users (curators). Using transactions data from the blockchain platform, we find evidence that authors collude by buying votes. We show that colluding authors make an extra reward worth $29 per week than what non-colluding authors make. The high productive authors make maximum gains from collusion, whereas the low productive authors may not make a profit considering the expenses on collusion. We show that colluding authors contribute to the platform for a longer period than non-colluding authors do. However, colluding authors gradually reduce their contributions over time. As more authors collude, the overall quality of contributions deteriorates, and the market value of the platform also reduces. Our findings have practical implications for designing governance mechanisms in blockchain applications.