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Hedera is a next-generation public distributed ledger that enables individuals and enterprises to build decentralised applications with speed, security, and scalability. Unlike traditional distributed ledgers, such as blockchains, Hedera is powered by a unique distributed ledger known as Hashgraph, which enables high throughput, low fees, and minimal energy consumption.
The network supports a wide range of use cases, from micropayments and tokenisation to supply chain tracking and decentralised identity. To learn more about Hedera's architecture and use cases in more depth, see the guide: What is Hedera?
Why Hedera’s Governance Model Matters
In a landscape where many decentralised networks struggle with either too much centralised control or ineffective, chaotic decision-making, Hedera’s governance model stands out as a deliberate attempt to strike a balance.
Rather than relying on anonymous validators or a small core development team, Hedera is governed by a council of globally recognised organisations, each with equal voting rights and limited-term membership. This model was intentionally designed to ensure stability, transparency, and long-term trust, qualities essential for enterprise adoption and regulatory compliance.
By distributing governance across industries and regions, Hedera reduces the risk of power consolidation and protocol forking, challenges that have historically plagued other DLT platforms. This article explores why that model is not only rare but also increasingly relevant as decentralised technologies move towards mainstream use.
How Governance Works on Hedera
Hedera’s model is inspired by VISA’s original model from 1968 and is governed through a limited liability company (LLC) operating agreement. This agreement outlines the legal responsibilities and obligations of a Governing Council, which currently consists of 31 members (as of July 2025), with plans to have a total of 39 members in the future. Each of these members plays a crucial role in ensuring the integrity of the Hedera network and protecting its users from the risk of forks.
Who Are the Governing Council Members?
The current Governing Council consists of highly respected organisations, including Google, Dell, IBM, LG, and EDF. Each member comes from different industries and geographies, and it’s, by sector, one of the most diverse networks in the DLT space.
To ensure diverse and objective governance, new members of the Governing Council are selected based on predetermined criteria approved by the majority of the existing members.
Apart from Swirlds, the company that formed Hedera in September 2017, all other council members have a limited term of 3 years. Members serve staggered three‑year terms, with no more than two consecutive terms permitted, although former members are allowed to rejoin after a 3-year waiting period.
Recent entrants represent sectors including gaming (Ubisoft), energy (Blockchain For Energy), electronics distribution (Arrow Electronics), and financial services (Standard Bank, DBS). This model supports dynamic policy development and a balanced distribution of influence across global markets.
Council members have two primary responsibilities:
- To participate in the governance of the Hedera network: All members contribute their expertise in decision-making related to software updates, Hedera Treasury management, network pricing, and regulatory compliance, among other prominent governance matters. By having a diverse group of council members with varied expertise and different perspectives, the decisions made aim to be more robust and comprehensive, reducing the chances of compromising the security and integrity of the network.
- To host and maintain a node on the Hedera network: Each council member is required to host and maintain one of the initial network nodes, either by using their infrastructure or by hosting it in a public cloud. No single entity can control the majority of nodes, ensuring that the network remains decentralised. At the same time, Hedera incentivises node runners to follow best practices for maintaining the node's security and performance.
In addition to participating in governance and hosting nodes, Council members will actively participate in the Technical Steering and Product Committee, Coin Committee, Finance Committee, Legal and Regulatory Committee, and other committees responsible for overseeing Hedera operations. Collectively, they ensure that various aspects of the network's operations are being monitored and that any issues are addressed promptly.
Who Chooses the Governing Council Members, and How?
Governing Council members are selected through a rigorous vetting and approval process overseen by the existing council. Prospective members are evaluated based on criteria such as industry leadership, technical expertise, and geographic diversity, ensuring a balanced and global representation.
New members must be approved by a majority vote of the current council, which helps maintain the integrity and independence of the governance model. This structured selection and member rotation process is designed to prevent concentration of power and encourage fresh perspectives.
Role of Hedera's Hashgraph Consensus Algorithm
For its consensus mechanism, Hedera employs the Hashgraph consensus algorithm utilising a form of Proof-of-Stake (PoS), which is asynchronous Byzantine Fault Tolerant (aBFT), ensuring reliable consensus even when some nodes fail or act maliciously. This ensures the network continues to reach consensus even in the presence of faulty or dishonest participants.
The Hashgraph consensus algorithm mechanism aims to ensure that no single council member or a group of members can prevent the community from reaching a consensus, nor can they change the consensus once it has been reached.
Every node eventually knows that consensus has been reached, thanks to the assumption that over two-thirds of participants follow the protocol and that messages eventually propagate through the gossip network. This process is more secure and reliable than blockchain-based systems, as hashing and virtual voting involve all nodes in sequence determination.
Additionally, the network is ACID (Atomicity, Consistency, Isolation, Durability) compliant, ensuring that the transactions are consistent and isolated, making it a decentralised database with the same properties as a standard or distributed database.
The Hashgraph consensus mechanism of Hedera ensures fairness since the nodes do not have special rights or responsibilities in establishing consensus. Instead, the consensus is reached democratically through a virtual voting process that achieves the same fair and secure properties as direct voting, but is also fast and practical.
The Hashgraph consensus algorithm utilises virtual voting to determine the linear ordering of events and transactions recorded inside them. This approach saves bandwidth and ensures that members always calculate their votes according to the rules, even if some nodes are dishonest.
Hedera is also fair in terms of access. It uses the Gossip protocol, where each member communicates with a random member and shares information. The history of communication is recorded in a hashgraph data structure, ensuring all members have a consistent view of transactions; meanwhile, no individual can stop or delay a transaction from entering the system.
Hedera also adheres to its governing documents, which are a set of legal agreements and protocols that outline the platform's governance structure, policies, and procedures. These documents include the Hedera LLC Operating Agreement, and the Hedera Governing Council Charter, designed to ensure the platform remains transparent and secure.
Three-Phased Plan Towards Complete Decentralisation
Whilst many blockchain networks rush towards immediate decentralisation, Hedera has adopted a methodical, user-centric approach to achieving complete network autonomy. Currently governed by the Hedera Council, a diverse body comprising leading global organisations dedicated to fostering trust, security, and innovation on the Hedera network, the network operates under a permissioned model designed to ensure stability and security during its evolution.
With decentralisation serving as a foundational principle and cornerstone of building the Hedera network to sustain long-term growth, the organisation recognises that transitioning governance control isn't simply about relinquishing authority, it's about safeguarding the interests of users, developers, and enterprises who depend on the network's reliability.
This deliberate, phased approach to a full permissionless decentralised network reflects Hedera's commitment to protecting the network and its users through responsible governance transitions, ensuring that the network's evolution prioritises user security and network integrity over rapid organisational change. Rather than pursuing decentralisation as an end in itself, Hedera views it as a means to create a more resilient, community-driven ecosystem that can better serve its users' long-term needs.
To achieve this vision responsibly, Hedera has structured its journey towards full decentralisation through a carefully orchestrated three-phase roadmap, each designed to progressively transfer governance whilst maintaining the network's stability and security.
Phase I: The Permissioned Council Member Nodes
The governance model in the first phase operates through a structured council framework. The council is responsible for establishing membership policies, managing the HBAR treasury, approving changes to the platform’s code, and for the infrastructure and operation of consensus nodes.
Though the mainnet and primary network services of Hedera are currently available for devs and end users to deploy dApps or create accounts, the consensus nodes are operated by a decentralised network of up to 39 governing council members. This distributed structure ensures that no single entity controls the network, providing a foundation for progressively broader participation in network governance.
Phase II: Invite-Only, Multiple Permissioned Consensus Nodes
Hedera will move to the next phase as Hedera's security, stability, and incentives become sufficient, which will be determined by the governing council. In this phase, peripheral parties and companies will be invited to join the mainnet as permissioned consensus node operators in exchange for HBAR.
The transition will allow Hedera to expand its network while maintaining a high level of security and stability, as well as incentivising node operators to participate in the network. It will also help in gradually increasing the decentralisation of the network, as more parties will be able to participate in consensus and governance decisions.
Phase III: Evolving Governance, The Plan to Go Permissionless
The third and final phase introduces an open, permissionless model, allowing anyone to join the network and participate in transaction consensus by staking HBAR. This Phase will prevent consolidation of power and collusion by validators, increasing the decentralisation and resilience of the network as more nodes are encouraged to join in.
The third phase will begin when the governing council has reached all 39 members and when the network has hundreds of permissioned, consensus nodes live on the Hedera mainnet. When Hedera becomes permissionless, any person or organisation will be able to host a Hedera mainnet consensus node on the network.
The Future of Hedera
Hedera's governance model relies on carefully-selected individuals working together towards a common goal. The council members have been elected based on their status and experience, and their efforts have resulted in a network that is efficient, secure, and scalable.
Although the current phase of Hedera's governance model is permissioned, the team is committed to keeping it open to the general public fairly and transparently. It will be done through a three-phased approach, allowing anyone to join and contribute to the network in the future.
The current council, made up of trusted and established players, adds to the reliability of early nodes. The careful planning for decentralised governance in phases further ensures Hedera's security and integrity. As the network continues to evolve towards total decentralised governance, Hedera remains committed to creating a secure, reliable, and decentralised platform.
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