Blockchain Governance

Overview

Effective governance is critical for blockchain projects, especially those serving SMEs and requiring stakeholder coordination across multiple jurisdictions. This research synthesis examines peer-reviewed frameworks for blockchain governance and demonstrates how Skyocean applies these principles to ensure transparent, accountable, and adaptive decision-making.

Governance Framework Foundations

Definition and Scope

Defining Blockchain Governance: A Framework for Analysis and Comparison
Authors: Wulf A. Kaal, Craig Calcaterra
Journal: Information Systems Management, 2020
DOI: 10.1080/10580530.2020.1720046

“blockchain governance is defined as ‘the means of achieving the direction, control, and coordination of stakeholders within the context of a given blockchain project to which they jointly contribute’”

Relevance to Skyocean: Skyocean’s governance must coordinate diverse stakeholders: SME buyers, suppliers, investors (SKYT token holders), technology partners (OriginTrail, Celo), and regulatory bodies. Our governance model balances these interests while maintaining platform integrity.

Three-Layer Governance Model

Defining Blockchain Governance: A Framework for Analysis and Comparison
Authors: Wulf A. Kaal, Craig Calcaterra
Journal: Information Systems Management, 2020
DOI: 10.1080/10580530.2020.1720046

The paper introduces a governance framework consisting of three layers:

Off-Chain Community - Social coordination, proposals, discussion

Off-Chain Development - Code changes, testing, deployment decisions

On-Chain Protocol - Smart contract rules, parameter updates, token economics

Relevance to Skyocean: Our governance operates across all three layers:

Off-chain community: Investor forums, SME feedback channels, pilot program retrospectives

Off-chain development: Edge Node updates, DKG schema evolution, smart contract audits

On-Chain protocol: SKYT token parameters, escrow contract rules, profit-sharing percentages

graph TD
    A[Off-Chain Community] --> B[Discussion & Proposals]
    A --> C[Stakeholder Voting]
    D[Off-Chain Development] --> E[Code Changes]
    D --> F[Testing & Review]
    G[On-Chain Protocol] --> H[Smart Contracts]
    G --> I[Token Economics]
    B --> E
    C --> E
    F --> H
    H --> I
    
    style A fill:#3FABF3
    style D fill:#87CEEB
    style G fill:#333340

Six Dimensions of Governance

Defining Blockchain Governance: A Framework for Analysis and Comparison
Authors: Wulf A. Kaal, Craig Calcaterra
Journal: Information Systems Management, 2020
DOI: 10.1080/10580530.2020.1720046

The framework identifies six governance dimensions:

Formation and Context - How the project originated, goals, vision

Roles - Who can participate, what functions they perform

Incentives - Why stakeholders participate, reward mechanisms

Membership - How participants join, requirements, permissions

Communication - Formal and informal channels for coordination

Decision Making - How proposals are evaluated, approved, implemented

Relevance to Skyocean: Each dimension is explicitly designed in our governance model (see mapping table below).

Skyocean Governance Mapping

Formation and Context

Context: Skyocean was founded to democratize global commodity trading for SMEs, addressing the documented $2.5T trade finance gap. Our vision is a transparent, accessible, blockchain-based marketplace where size doesn’t determine opportunity.

Governance implication: Early-stage projects require some centralization for rapid iteration. Skyocean begins with founder-led governance during pilot phase, with progressive decentralization as the platform matures and community grows.

Roles

Role	Function	Governance Rights
Founders/Core Team	Platform development, partnerships, strategy	Proposal authority; emergency protocol changes (time-locked)
SKYT Token Holders	Capital provision, network security	Voting on major protocol changes; profit distribution parameters
SME Users	Trading activity, platform feedback	Feature requests; pilot program participation; reputation building
Investors (Profit-Share)	Trade financing	Vote on risk parameters; escrow contract terms
Technology Partners	Infrastructure (DKG, blockchain)	Technical advisory; interoperability standards
Validators/Attestors	Milestone verification	Quality control; attestation standards

Research backing: Clear role definition prevents governance paralysis and ensures accountability (dimension 2 of governance framework).

Incentives

Governance in the Blockchain Economy: A Framework and Research Agenda
Authors: Roman Beck, Christoph Müller-Bloch, John Leslie King
Journal: Journal of the Association for Information Systems, 2018
DOI: 10.17705/1jais.00518

Incentive alignment is critical for blockchain governance. The paper emphasizes that stakeholders must have economic or social reasons to participate in governance.

Relevance to Skyocean: Our incentive structure aligns all stakeholders:

Stakeholder	Economic Incentive	Social/Strategic Incentive
SKYT Token Holders	Profit-sharing from trade revenue	Platform growth increases token utility/value
SME Buyers	Lower financing costs, faster access	Reputation building; network effects
SME Suppliers	Faster payment (stablecoin settlement)	Access to broader buyer base
Investors (Trade Finance)	1.5-3% profit per trade	Portfolio diversification; blockchain exposure
Core Team	Token allocation (vested); transaction fees	Mission-driven (SME empowerment); innovation leadership

Membership

Membership tiers:

Public/Permissionless (read-only):
- Anyone can view public KAs (Knowledge Assets) in DKG
- Anyone can review on-chain transactions (Polygon, Celo)
- Transparency by default
Verified Users (KYC/KYB):
- SMEs complete identity verification (DIDs/VCs)
- Required for trading activity, escrow participation
- MiCA-compliant onboarding
Token Holders (SKYT):
- Purchase or earn SKYT tokens
- Governance voting rights (weighted by stake)
- Access to profit-sharing pool
Attestors (permissioned):
- Carriers, inspectors, customs agents
- Approved via reputation + certification review
- Can sign milestone attestations in DKG

Research backing: Tiered membership balances openness (for transparency) with accountability (for sensitive operations). Aligns with dimension 4 (Membership) of governance framework.

Communication

Defining Blockchain Governance: A Framework for Analysis and Comparison
Authors: Wulf A. Kaal, Craig Calcaterra
Journal: Information Systems Management, 2020
DOI: 10.1080/10580530.2020.1720046

“This dimension [Communication] captures the formal and informal ways of communication between the stakeholders of a blockchain”

Relevance to Skyocean: Multi-channel communication ensures all stakeholders can participate:

Formal channels:

GitHub: Code proposals, technical specifications
Governance forum: Structured proposals, voting (e.g., Snapshot for off-chain signaling)
Quarterly reports: Financial results, platform metrics, roadmap updates
Investor relations: Dedicated email ([email protected]), scheduled calls

Informal channels:

Discord: Real-time discussion, support, community building
Telegram: Regional channels (Ghana, Paraguay), language-specific
X/Twitter: Announcements, market updates, thought leadership
Monthly AMAs: Open Q&A with founders and core team

Decision Making

Governance in the Blockchain Economy: A Framework and Research Agenda
Authors: Roman Beck, Christoph Müller-Bloch, John Leslie King
Journal: Journal of the Association for Information Systems, 2018
DOI: 10.17705/1jais.00518

“The blockchain literature and our case study suggest that the locus of decision rights in the blockchain economy will be more decentralized than in the digital economy”

Relevance to Skyocean: We implement progressive decentralization:

Phase 1: Pilot (Current)

Decision authority: Core team (founders + key developers)
Rationale: Rapid iteration required; limited stakeholder base; market validation priority
Scope: Feature prioritization, partnership selection, pilot program design
Accountability: Quarterly investor updates; public roadmap

Phase 2: Post-Pilot (6-12 months)

Decision authority: Hybrid (core team + token holder voting on major decisions)
Rationale: Growing user base; established platform; need for community buy-in
Scope: Token holders vote on: protocol changes, profit-sharing parameters, treasury allocation
Mechanism: Snapshot (off-chain signaling) or on-chain voting (Governor contract)

Phase 3: Mature Platform (12-24 months)

Decision authority: Decentralized (DAO structure with core team as executors)
Rationale: Platform stability; large community; regulatory clarity
Scope: Most decisions via token-weighted voting; emergency powers time-locked or removed
Mechanism: On-chain DAO with proposal threshold, quorum requirements, time delays

Voting parameters (Phase 2+):

Proposal threshold: 1% of total SKYT supply (prevents spam)
Quorum: 10% of circulating supply must vote
Approval: Simple majority (>50%) or supermajority (66%) for critical changes
Timelock: 48-hour delay before execution (allows exit if disagreement)

Accountability Mechanisms

Technical Accountability

Governance in the Blockchain Economy: A Framework and Research Agenda
Authors: Roman Beck, Christoph Müller-Bloch, John Leslie King
Journal: Journal of the Association for Information Systems, 2018
DOI: 10.17705/1jais.00518

“In the blockchain economy, accountability in principle will increasingly be enacted technically instead of institutionally”

Relevance to Skyocean: Smart contracts enforce accountability automatically:

Escrow contracts:

Funds locked until DKG milestones attested → no counterparty can unilaterally withhold payment
Profit-sharing enforced on-chain → investors receive exact percentage agreed
Refund conditions coded → if conditions fail, automatic refund (no arbitration needed)

Attestation requirements:

Milestones must be signed by authorized DIDs → prevents false claims
Multi-party verification (e.g., carrier + customs + buyer) → reduces collusion risk
Timestamps and hashes immutable → audit trail cannot be altered retroactively

Token vesting:

Core team tokens vested over 24-48 months → alignment with long-term success
Unvested tokens don’t vote → prevents centralized governance via team allocation

Transparency reporting:

Public dashboard: platform metrics (trade volume, user count, escrow success rate)
Open-source components: Edge Node adapters, KA schemas, smart contract code
Audited financials: Annual audit by reputable firm (post-Series A)

Reputation systems:

SMEs build on-chain reputation (trade history, attestations received)
Attestors rated by accuracy (false attestations penalized via stake slashing)
Core team reputation tied to platform success (social and economic incentive alignment)

Case Study Insights

Ethereum Governance Lessons

Defining Blockchain Governance: A Framework for Analysis and Comparison
Authors: Wulf A. Kaal, Craig Calcaterra
Journal: Information Systems Management, 2020
DOI: 10.1080/10580530.2020.1720046

“The case studies of Ethereum and EOS.IO presented in the paper provide practical insights into how blockchain governance can impact a project’s success and acceptance”

Relevance to Skyocean: Ethereum’s off-chain governance (EIPs, core dev calls, rough consensus) shows that social coordination can work at scale, but requires:

Clear proposal processes (we adopt a similar EIP-style for Skyocean Improvement Proposals - SIPs)

Recognized leaders/maintainers (our core team fills this role early)

Willingness to hard fork if irreconcilable disagreement (protocol ossification risk vs. adaptability trade-off)

EOS.IO Governance Lessons

Defining Blockchain Governance: A Framework for Analysis and Comparison
Authors: Wulf A. Kaal, Craig Calcaterra
Journal: Information Systems Management, 2020
DOI: 10.1080/10580530.2020.1720046

EOS.IO’s on-chain governance (21 elected block producers) highlights risks:

Vote buying and cartel formation

Low voter turnout (apathy from small holders)

Centralization despite decentralized mechanism design

Relevance to Skyocean: We avoid pure on-chain voting in early phases. Hybrid model (off-chain signaling + on-chain execution) allows flexibility while maintaining transparency. As platform matures, we can adopt more on-chain governance with safeguards (quadratic voting, delegation, reputation-weighted voting).

Swarm City Case

Governance in the Blockchain Economy: A Framework and Research Agenda
Authors: Roman Beck, Christoph Müller-Bloch, John Leslie King
Journal: Journal of the Association for Information Systems, 2018
DOI: 10.17705/1jais.00518

“The Swarm City case clearly demonstrates that the emergence of the blockchain economy demands a rethinking of governance”

Relevance to Skyocean: Swarm City’s transition from centralized to decentralized governance illustrates challenges of premature decentralization. Skyocean follows a staged approach, decentralizing only when:

Platform is technically stable (fewer breaking changes needed)

Community is sufficiently large (diverse stakeholders to avoid capture)

Governance processes are tested (we pilot voting mechanisms before full rollout)

Framework as Continuous Improvement Tool

Expert Validation

Defining Blockchain Governance: A Framework for Analysis and Comparison
Authors: Wulf A. Kaal, Craig Calcaterra
Journal: Information Systems Management, 2020
DOI: 10.1080/10580530.2020.1720046

“The experts widely perceived an added value of the framework for stakeholders dealing with blockchain governance”

Relevance to Skyocean: We use the 6-dimension, 3-layer framework as a checklist for governance design:

Quarterly governance review:

Assess each dimension: Are roles clear? Are incentives aligned? Is communication effective?
Evaluate each layer: Is community engagement growing? Is development process transparent? Are on-chain mechanisms functioning?
Iterate based on stakeholder feedback and platform evolution

Future Work and Best Practices

Defining Blockchain Governance: A Framework for Analysis and Comparison
Authors: Wulf A. Kaal, Craig Calcaterra
Journal: Information Systems Management, 2020
DOI: 10.1080/10580530.2020.1720046

“Another interesting area of research to pursue would be to define what ‘good’ governance entails for a blockchain”

Relevance to Skyocean: We contribute to this research by documenting our governance evolution and publishing case studies from pilot programs. As an SME-focused platform with regulatory compliance requirements (MiCA), our governance model may offer insights for other blockchain projects in similar contexts.

Decision Rights Allocation

Current State (Pilot Phase)

Decision Type	Authority	Rationale
Smart contract deployment	Core team (multi-sig)	Security; regulatory compliance
Feature prioritization	Core team + SME feedback	User-driven roadmap
Partnership selection	Core team	Strategic fit; due diligence required
Profit-sharing %	Fixed (2% baseline)	Stability during pilot; will be governed post-pilot
Treasury allocation	Core team (transparent reporting)	Operational flexibility
Emergency protocol changes	Core team (time-locked 48h)	Security response; community can exit

Future State (Decentralized Phase)

Governance in the Blockchain Economy: A Framework and Research Agenda
Authors: Roman Beck, Christoph Müller-Bloch, John Leslie King
Journal: Journal of the Association for Information Systems, 2018
DOI: 10.17705/1jais.00518

“Future research should investigate how decision rights are allocated in the blockchain economy”

Skyocean’s progressive allocation:

Decision Type	Authority (Future)	Mechanism
Smart contract upgrades	Token holder vote (66% supermajority)	Governor contract; 7-day voting period
Feature prioritization	Token holder signaling + core team execution	Snapshot poll; top 3 features implemented
Partnership selection	Core team proposes; token holders approve (strategic partnerships)	Simple majority vote
Profit-sharing %	Token holder vote (simple majority)	Range: 1.5-3%; adjustable quarterly
Treasury allocation	Budget proposed by core team; approved by token holders	Annual budget vote
Emergency protocol changes	Multi-sig (5-of-9: 3 core, 3 community, 3 partners)	Time-lock reduced to 24h for emergencies

Governance and Regulatory Compliance

MiCA Alignment

Skyocean’s governance must comply with EU MiCA (Markets in Crypto-Assets) regulation:

Token classification: SKYT is a utility token (not a security) but profit-sharing mechanism requires careful structuring Governance disclosure: Token holder rights, voting mechanisms, and decision processes must be transparently documented Issuer obligations: White paper requirements, transparency obligations, and marketing rules apply

Governance adaptation:

All governance proposals publicly archived (meets transparency obligation)
Major decisions announced via official channels (meets communication obligation)
Token holder rights clearly defined in documentation (meets disclosure obligation)

KYC/AML Integration

Governance participants (especially voters on financial decisions) must be KYC’d to comply with AML regulations:

Implementation:

DIDs/VCs (Self Protocol or similar) verify identity
Voting contract checks KYC status before counting vote
Anonymity preserved (only “KYC’d: yes/no” flag, no PII on-chain)

Skyocean Improvement Proposals (SIPs)

Proposal Process

Inspired by Ethereum’s EIP process, we introduce SIPs (Skyocean Improvement Proposals):

Stages:

Idea: Forum discussion, rough concept
Draft: Formal SIP document (problem, solution, implementation, risks)
Review: Core team + community feedback (2-week period)
Vote: Token holder vote (if applicable) or core team decision (pilot phase)
Implementation: Merged to codebase; deployed per schedule
Final: Live on mainnet; documented in SIP archive

SIP Categories:

Core: Protocol changes (smart contracts, token economics)
Integration: New partner integrations (B2B platforms, payment rails)
Governance: Governance process changes (voting parameters, roles)
Informational: Best practices, design patterns (no implementation)

Example SIP:

SIP-001: Introduce Quadratic Voting for Governance

Author: [Name]
Status: Draft
Type: Governance
Created: 2025-12-01

Abstract: Replace simple token-weighted voting with quadratic voting to reduce whale dominance.

Motivation: Current 1-token-1-vote risks governance capture by large holders...

Specification: Implement vote weight = sqrt(token_balance)...

Rationale: Research shows quadratic voting increases small holder participation...

Backwards Compatibility: Non-breaking; applies to future votes only...

Governance Metrics and KPIs

To evaluate governance effectiveness, we track:

Participation metrics:

Voter turnout (% of circulating supply voting)
Proposal count (# of SIPs submitted per quarter)
Community engagement (forum posts, Discord activity)

Decision quality metrics:

Proposal success rate (% of implemented SIPs achieving goals)
Stakeholder satisfaction (quarterly survey: “Do you trust governance process?”)
Iteration speed (time from proposal to implementation)

Decentralization metrics:

Gini coefficient of token distribution (target: < 0.5)
Number of independent voters (not via delegation)
Core team influence (% of votes where core team was deciding factor)

Targets (end of Year 1):

15%+ voter turnout
< 0.6 Gini coefficient
80%+ stakeholder trust rating
50+ active community governance participants

Conclusion

Effective blockchain governance requires balancing multiple objectives: speed vs. decentralization, flexibility vs. predictability, inclusiveness vs. efficiency. Academic research provides frameworks (3 layers, 6 dimensions) and case study lessons (Ethereum, EOS, Swarm City) that inform Skyocean’s staged governance approach.

By starting with founder-led governance during the pilot phase and progressively decentralizing as the platform matures, we maintain agility while building toward a community-governed future. Technical accountability mechanisms (smart contracts, on-chain voting) complement social accountability (transparency reporting, reputation systems) to create a robust, trustworthy governance model.

SME Empowerment - Why blockchain governance matters for SMEs
Supply Chain Transparency - How transparency affects adoption and trust

References

Beck, R., Müller-Bloch, C., & King, J. L. (2018). “Governance in the Blockchain Economy: A Framework and Research Agenda.” Journal of the Association for Information Systems, 19(10), 1020-1034. DOI: 10.17705/1jais.00518 Read paper
Kaal, W. A., & Calcaterra, C. (2020). “Defining Blockchain Governance: A Framework for Analysis and Comparison.” Information Systems Management. DOI: 10.1080/10580530.2020.1720046 Read paper
Ethereum Improvement Proposals (EIPs): https://eips.ethereum.org/
Regulation (EU) 2023/1114 (MiCA): https://eur-lex.europa.eu/eli/reg/2023/1114/oj