How Governance Works in Handshake

Handshake (HNS) is a decentralized, permissionless naming protocol that seeks to replace the traditional Domain Name System (DNS). Governance within Handshake is primarily carried out through its proof-of-work (PoW) consensus mechanism, which ensures that miners play a central role in validating transactions and securing the network.

Unlike other blockchain projects that incorporate structured on-chain governance mechanisms such as voting by token holders or governance councils, Handshake remains largely governed through its open-source development model and mining incentives. Any proposed upgrades or changes to the network must gain traction within the developer community before being adopted by miners who run the software.

Decentralization and Governance Challenges

Since Handshake does not have a built-in governance token that allows holders to vote directly on protocol changes, its governance is more informal and community-driven. Developers and miners need to reach a consensus before implementing any updates, which can slow down decision-making and limit the flexibility of protocol upgrades.

The lack of direct governance mechanisms has both benefits and drawbacks. On one hand, it reinforces the decentralized ethos of the network, preventing centralized decision-making from influencing the protocol. On the other hand, it can create challenges when protocol improvements or security upgrades are required, as any major changes depend on sufficient community and miner support.

Role of Developers and Miners

In Handshake, developers play a crucial role in governance by proposing and discussing potential protocol improvements through open-source contributions. Since there is no formal governance process in place, network upgrades typically originate from discussions among developers, community members, and miners.

Miners have the final say in governance decisions because they choose whether to adopt new software updates. If a proposed change gains enough support, it is integrated into the network organically as more miners update their software to reflect the changes. However, proposed improvements that lack sufficient miner or developer backing may stall indefinitely.

Governance Risks and Potential Centralization

Despite Handshake’s commitment to decentralization, certain governance challenges remain. Because power is concentrated among miners and dominant contributors to the open-source codebase, there is a risk that decisions may be influenced by a few key players. Additionally, without a structured governance framework, disagreements on protocol changes could lead to stalled upgrades or possible forks in the network.