Major crypto exchange Binance, Bitfinex, and block producers EOS Cannon and EOS Nation are the newest members of Equilibrium’s governance system. Notably, the EOS-based DeFi protocol had called on to these organizations to help them change codes and approve smart contracts.
Equilibrium, a DeFi protocol that works basically the same as MakerDAO (MKR), expects the new members of its governance system to sign off on upgrades for the project’s smart contracts. Equilibrium’s CEO, Alex Melikhov, said in a press interview that having a smart contract code that can be quickly updated is one of the main drivers behind EOS projects. Notably, the clients can migrate to the latest version of Equilibrium’s application without system disruption, seamlessly and efficiently.
Melikhov explained that the process is different from that of Ethereum, which he described as a complex migration system. He stressed that Ethereum’s procedure may render the old version useless to avoid security breaches, just like what happened to MKR’s single collateral DAI.
How does governance work?
Notably, the governance supervisors are entitled to a multi-signature key which they would use to approve and authorize the proposed upgrades to Equilibrium’s ecosystem. In the interview, the CEO touted that the four members had been chosen carefully with the help of the company’s council members. He even emphasized that Binance, along with other governance supervisors, had nothing more to prove in terms of reputation and integrity relevant to matters associated with smart contract updates.
As explained, instead of having a single key holder who can do anything they want, there would be a team of reputable and knowledgeable participants. The latter would review and verify the relevance of smart contract upgrades. However, the CEO emphasized that they would also perform an independent review.
Equilibrium’s decision had sparked a good deal of interest in the DeFi ecosystem. In most projects based on Ethereum, only the protocol founders are entitled to admin keys, providing them with absolute rights over the smart contracts. It’s not a secret that the community frowns upon this practice.
In the press interview, Melikhov said that the company’s governance system is already decentralized. However, he also admitted that additional efforts are still needed to make it a fully trustless process backed by algorithms and other relevant economic incentives. In the end, he also ensured that Equilibrium has no plans to destroy the upgrade keys, as doing so would close the door for more promising EOS possibilities.