The basic parameters of governance in blockchain technology are- consensus, incentives, information etc. However technically the governance can be classified into two categories- Off-chain Governance and On-chain governance.
Off-chain governance model creates a balance of power between core developers, miners, users, and business entities as part of the community. There is also a need for evolution that is composed of gradually implementing improvements. However, off-chain governance is relatively centralized and to some extent excludes many mainstream users that lack the technical knowledge or financial power to effect network decisions adequately.
It is also true that in blockchain governance, users of blockchains are granted flexibility which is not that obvious with traditional centralized governance models. Hard forks empower users not happy with the governance of a network to create their own system by splitting the original open-source protocol. The costs for doing so are dramatically reduced compared to splitting a government or a centralized system. That is a testimony of the flexibility of governance in blockchain technology.
The consensus in off-chain governance model is typically achieved by leaders in the community. For example, Bitcoin’s off-chain consensus (not consensus on transactions) is reached by large mining players such as Bitmain, core devs, and business entities interacting with each other and coming to an agreement. Miners want fees, devs want controlled implementation of change as well as increasing network success, and businesses want whatever is best for their bottom line.
The inherent transparency and trustless, decentralized nature of Blockchain technology offers a fair governance model which is not available with governments or centralized system. This transparency is the backbone of its system and it is much better than traditional models of governance & centralized systems.
On-chain governance model for blockchain technology primarily focuses on direct democracy through on-chain voting that are optimized for that specific network. Voting results are governed algorithmically and their automatic execution is built directly into the protocol. However the primary concerns is the historical precedent for governance in general. Governance models obviously take a long time to develop.
Incentives in on-chain governance models vary distinctly from the off-chain form in that the design is to transfer power from the miners and developers to the users. This can also be seen as a better development in the context of governance of blockchains.
Information in on-chain governance systems is similar to information of off-chain governance systems in that the transparency of the blockchain is not removed. However, they differ in that voting and proposals for development happen transparently on-chain for everyone to see.Whatever be the case whether it is on-chain or off-chain governance, it definitely brings more transparency and more flexibility than the traditional centralized systems.