Algorithmic Governance
Also known as: Code-Based Governance, Smart Governance, Automated Protocol Control
The use of encoded rules and algorithms to automate decision-making in blockchain protocols and DAOs.
Algorithmic Governance is a governance model where decisions are made or constrained by predefined rules encoded in smart contracts. It removes or reduces human discretion in protocol management by automating decisions like interest rates, token supply, or dispute resolution. DAOs, stablecoins like DAI, and on-chain treasuries often use algorithmic governance to ensure fairness, transparency, and efficiency. While offering automation, it also introduces risks of rigidity and exploitability if the code lacks adaptability or has flaws.