ARC Governance: Decentralized Credit Protocol and On-Chain Governance

The ARC Governance whitepaper was released by the ARCx core team in 2022, aiming to establish a decentralized governance mechanism for the ARCx protocol and address the issue of low capital efficiency in DeFi lending markets caused by the lack of a reputation layer.

The whitepaper of ARC Governance focuses on the themes of “governance mechanisms of the ARCx protocol” and “decentralized credit markets.” What makes ARC Governance unique is its introduction of the ARCx governance token, which allows token holders to vote on protocol fund expenditures and future upgrades, and to propose dynamic lending mechanisms based on DeFi credit scores. The significance of ARC Governance lies in its ability to greatly enhance capital efficiency in DeFi lending through incentive alignment and reputation assessment, laying a foundation of fair governance for the ongoing development of decentralized finance.

The original intention of ARC Governance is to build a community-driven, efficient, and fair decentralized protocol governance system and credit lending market. The core viewpoint presented in the ARC Governance whitepaper is that by combining the voting rights of on-chain governance tokens with a DeFi credit scoring mechanism based on historical behavior, it is possible to achieve more accurate risk assessment and optimized capital allocation in a decentralized environment, thereby promoting the sustainable development of the protocol and the maturity of the DeFi ecosystem.