What are the pros and cons of using OpenZeppelin ERC20Votes?

Question

I want to use this extension for an ERC20 token.

What are the pros and cons (if any) of adding this to it?

Answer 1

These are the pros and cons I have identified so far:

Pros

• Built-in Governance: ERC20Votes incorporates on-chain governance features, allowing token holders to participate in decision-making processes such as voting on proposals, upgrades or parameter changes.

• Transparency: On-chain governance provides transparency by making all voting activities publicly accessible on the Ethereum blockchain. This ensures accountability and reduces the potential for manipulation or fraud in decision-making processes.

Cons

• Complexity: Implementing on-chain governance adds complexity to smart contract development compared to standard ERC20 tokens. Developers need to understand governance mechanisms, potential edge cases and security considerations, which may require additional time and expertise.

• Gas Costs: On-chain governance transactions incur gas costs, which can be significant depending on the complexity of voting mechanisms and the number of participants. High gas costs may discourage small token holders from actively participating in governance processes.

• Vulnerabilities: While OpenZeppelin strives for security, smart contracts are still susceptible to bugs and vulnerabilities. Introducing governance features increases the attack surface and requires thorough testing and auditing to mitigate risks effectively.

As a side note, while ERC20Votes contract is customizable and allows developers to configure parameters such as voting duration, quorum requirements and voting power distribution, this extension won't work if your project is looking for a much more tailored governance solution.