ZKsync, an Ethereum scaling solution and the 7th largest rollup by total value locked (TVL), outlined its new allegedly decentralized governance system today. “ZKsync is shipping,” wrote Alex Gluchowski, co-founder and CEO of Matter Labs, the firm behind ZKsync. “The ZKsync governance system just went live. It’s raising the bar for decentralized governance systems that are built to last.” ZK, the protocol’s native token, spiked 5% to $0.11 today. The asset is up 12% in the past week. The system brings a three-body structure which includes the ZK token assembly, a cohort of token holders who delegate their voting power to delegates and are allowed to submit and vote on proposals to upgrade the protocol, token, and governance system. According to the team, this is the most important facet of the system because holders and their delegates can initiate ordinary upgrades to the protocol directly on-chain, instead of relying on a single multi-sig. “This is true on-chain governance, the standard every protocol should aspire to meet,” wrote the team. Delegates will also have legal recourse to join the ZKsync Association, an ownerless, non-profit association which will aim to address potential personal liability concerns. The second part of the new structure is the ZKsync Security Council, a group of engineers, auditors, and security professionals. Lastly, ZKsync Guardians ensure that governance proposals align with the values of the ZK Credo. This means they will have veto power, acting as checks and balances for the other participants. A Middle Ground According to Gabriel Shapiro – who serves as legal advisor to ZKsync through his firm MetaLexPro and will be both a guardian and delegate – the new structure represents a middle ground between traditional companies’ checks and balances, and those employed by DAOs. He alluded to the Compound Finance case, in which a delegate group was accused of attacking governance through a million-dollar proposal, ultimately leading to a proposal for countering future actions. “I think the Compound case shows that there is a need for a system of checks-and-balances that creates an optimal equilibrium among competing interests,” Shapiro told The Defiant. “We have this balance with traditional public entities (big public corporations like Apple, Microsoft, Meta, Tesla) mainly through regulations and contracting practices that counter-balance labor against investors.” In crypto, meanwhile, we have to recreate similar checkpoints through code and incentives. Which, Shapiro claims, has proven DAOs to be “somewhat naive” if they think the organization controls the relevant systems and assets fully on-chain. ZKsync’s new governance system, he concluded, “represents a middle ground.” Tokenholders have strong, direct on-chain influence over the systems they depend on. “Importantly, in ZKsync's set-up, there is an actual standard for what constitutes a governance attack rather than it being purely arbitrary and subjective,” he said. Mostly Celebrated The announcement was mostly met with celebratory remarks from the crypto community on Twitter. Some weren’t so enthusiastic, however. Anatoly Yakovenko, co-founder of Solana, lauded the system as a “dramatic improvement” for both technical and legal resilience of the protocol, and a critical step towards Stage 2 decentralization, but noted that it continues to be similar to a multi-sig where the “same exact honest majority assumptions apply.” Stage 2 is the final step in decentralization where rollups become fully managed by smart contracts. Yesterday, Ethereum creator Vitalik Buterin announced he would only be publicly mentioning L2s that are stage 1+, with *maybe a short grace period* for new genuinely interesting projects. “The era of rollups being glorified multisigs is coming to an end. The era of cryptographic trust is upon us,” he wrote. ZKsync faced controversy back in June after the project airdropped 3.6 billion tokens to early users. Some users felt that the team was in an impossible position considering the large number of sybil clusters, while others were outraged that real users were not being rewarded.