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| 1 | +Arbitrum chains (as L2 or L3 solutions settling on Ethereum or Arbitrum), feature customizable governance, which refers to the ability for chain creators to define and implement their own governance protocols tailored to specific project needs. This flexibility contrasts with public chains like Arbitrum One, which is governed by the decentralized Arbitrum DAO using the `$ARB` token for proposals, voting, and upgrades. Custom governance can include setting up unique DAO structures, tokenomics, voting mechanisms (e.g., delegation, proportional weighting), treasury management, and even specialized roles like a Security Council for emergencies, all enforced through smart contracts. It allows for progressive decentralization, where chains start with centralized elements (e.g., a "chain owner" role for upgrades and bug fixes) and evolve toward community-driven models, potentially integrating features like time-delayed proposals for user opt-outs or compatibility with Ethereum upgrades. |
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| 3 | +## Pros of Customizable Governance on Arbitrum Chains |
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| 5 | +- **Tailored Flexibility and Experimentation**: Enables projects to customize governance to fit unique use cases, such as optimizing security models, resource management, or execution environments, fostering innovation and scalability in a multi-chain ecosystem. |
| 6 | +- **Progressive Decentralization**: Allows gradual transfer of control from initial centralized roles (e.g., chain owners) to community governance via tokens like `$ARB`, reducing centralization risks while supporting necessary upgrades, bug fixes, and Ethereum compatibility. |
| 7 | +- **Community Empowerment and Fairness**: Distributes decision-making to diverse stakeholders through airdrops, delegations, and voting, ensuring ecosystem-aligned changes with built-in protections like review periods and asset withdrawal options. |
| 8 | +- **Emergency Handling and Security**: Incorporates customizable elements like a Security Council for rapid responses to vulnerabilities, balancing speed with decentralization through elections and constitutional constraints. |
| 9 | +- **Evolvability**: The system can self-modify, allowing the DAO to refine governance (e.g., minimizing centralized roles) as technology and risks evolve, promoting long-term adaptability. |
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| 11 | +## Cons of Customizable Governance on Arbitrum Chains |
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| 13 | +- **Residual Centralization Risks**: Features like the Security Council introduce permissioned elements that can bypass full community processes, potentially enabling rapid changes without broad input, though mitigated by oversight. |
| 14 | +- **Complexity in Implementation**: Customizing governance requires careful design of smart contracts and processes, which could lead to vulnerabilities if not properly audited, and relies on L1 enforcement for upgrades, adding layers of dependency. |
| 15 | +- **Initial Power Imbalances**: Early token distributions (e.g., airdrops) might concentrate influence among stakeholders, despite efforts to mitigate Sybil attacks, affecting fairness in nascent chains. |
| 16 | +- **Emergency Procedure Vulnerabilities**: Quick actions in crises could risk misuse or lack of transparency, even with requirements for reports and constitutional adherence. |
| 17 | +- **Slower Full Decentralization**: The need for progressive steps and community consensus can delay complete decentralization, especially for L2 chains tied to Ethereum's constraints, compared to more rigid but immediate models. |
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