Governance

As Bitcoin and Ethereum have already demonstrated, even in the best decentralized projects, developers hold more power over the project than any other stakeholders. In case of Bitcoin, the developers of the blockchain were the main reason for the Bitcoin Cash and SegWit2x hard forks. In case of Ethereum, the developers chose to create the Ethereum Classic fork after the DAO hack. When the power of a decentralized system is in the hands of a small group of people, the trust in the protocol is undermined and people are less likely to embrace it.

The Lux Protocol introduces voter permissions, which makes the decision making a more democratic process. The voting is tamper-proof and conducted on the Lux Network. Every LUX holder can vote for changes to the Lux Protocol and participate in its development. The price of LUX on the market act as a measure of the protocol's importance, as only LUX holders are allowed to apply for a proof of humanity token to participate in voting. This ensures that LUX holders are incentivized to keep the fees as low as possible in order to maintain market liquidity and trade volume. The more trades that happen through the Lux Protocol, the more power LUX holders gain, and the greater the market value of the LUX gets.

The Lux Protocol expands the concept of shared infrastructure ownership. Power imbalances between stakeholders are mitigated by the introduction of democratic governance mechanisms through smart contracts. Smart contracts are publicly auditable set of predefined rules with power over entities and funds. LUX Token holders can vote on almost every aspect of the Lux Protocol. All network parameters, from fee schedules to block intervals and transaction sizes, can be tuned via community voting. Users can even vote for others to vote in their stead. Proxy voting ensures that everyone in the ecosystem is properly represented, even if they do not have the time or the inclination to weigh in on every single issue.

LX's DApp allows LUX holders to navigate votes, discuss and coordinate proposals, and vote for changes in the LUX. The DApp design prioritizes ease of use and accessibility, making governance of the exchange platform fair and democratic.