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Core Report Governance

Polygon announced the Polygon Governance Team in January 2022. Its objective is to increase the decentralization of Polygon’s products via off-chain and on-chain governance frameworks. 

At the moment, the governance structure for the suite of Polygon’s aforementioned products rests mostly in the team’s hands, and governance is not decentralized. The company Polygon also oversees corporate development strategy to drive the growth of the products. These decisions are not left to the end-user or token holder, but rather to company executives.

Polygon’s thinking is that each product’s life cycle provides junctures where a gradual increase in decentralization can and should take place, especially as the user community around the product matures. 

PoS Chain Validators and Decentralization

The most mature Polygon product at the time is the PoS chain. Validators for the PoS chain are currently part of a validator set and are capped at 100 by the Polygon Team. This set was established during testnet and has remained unchanged. At the start of 2023, the minimum required stake to become a validator was ~625,000 MATIC (~$475,000), a nearly 4x from just the year prior.  

At the moment, a single wealthy actor could remove any validators with a smaller stake until reaching a two-thirds consensus majority. This is a risk with the current governance structure of the PoS chain, which has led to the consideration of different governance mechanisms. 

To optimize for decentralization, validators must self-regulate network participation according to an agreed-upon set of parameters among the community. Over several weeks in H2 2022, only three validators created ~30% of all blocks, while the top-six validators produced over 50% of all blocks. This signals that there's still considerable room for improvement among the validator set. 

MATIC validator distribution as of Q1 2023, Source: TechDreams

MATIC validator distribution as of Q1 2023. Source

Additionally, there are ~275 nodes across the planet, with 90%+ in the U.S. and Germany alone. Ideally, the PoS chain will increase its validator and node count while adding geographic diversity to hedge against long-tail regulatory risk.

Top 10 Countries for Polygon Nodes, Source: polygonscan

Polygon DAO

The Polygon Ecosystem DAO was formed in September of 2021 by community members who took part in growing the ecosystem via financial grants. Polygon has given a $1 million pledge, and the team is creating processes and conducting research to act as a community-led ecosystem growth facilitator. 

The Polygon team has extended an invitation to projects in the ecosystem to participate in the DAO’s growth-focused governance. The DAO’s goal is to empower an established governance community long-term that deliberates and make decisions on the future direction of Polygon’s mature suite of products. Additionally, a Polygon Governance Team was established at the end of 2017 to further decentralize the Polygon ecosystem via off-chain and on-chain governance frameworks.

It's important to note that all of Polygon’s suite of solutions that are meant to make it a ZK-scaling solution powerhouse have some levels of dependencies on each other. Users and investors will need to understand these dependencies across products as the products themselves evolve and enter the market, as on and off-chain governance frameworks that are implemented may evolve as a result.

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