What is the difference between the Hedera Council model and the "one coin, one vote" blockchain?

Hedrac Council Model: A blockchain governance mechanism different from token voting

Hedrac does not allow token holders to vote on network decisions, like many blockchains. Instead, a fixed group of up to 39 global organizations, the Hedlag Council, makes governance decisions through equal voting rights, regardless of how many HBAR tokens each member holds. This is in stark contrast to the "one coin, one vote" system, where voting rights are directly linked to token holdings. These two models solve the same problem in fundamentally different ways: who controls the network.

What is the Hedlag Council Model?

The Hedlag Council is a governance body responsible for operating network nodes, managing the HBAR pool, and setting the technical direction of the platform. As of early 2026, the council covers a maximum of 34 members from 11 industries. Each member will serve for a maximum of two consecutive terms of three years each, but Swirlds has a permanent seat. Council members include Avery Dennison, Boeing, Deutsche Telekom, European Law Firm, FIS (WorldPay), Google, IBM, LG Electronics, Magalu, Nomura Securities and other companies, as well as Accenture, DBS Bank, Dell and the Indian Institute of Technology Madras.

Each board member has one vote, whether it is a multinational bank or a university research institution. Each member enjoys equal voting rights regardless of company size or industry. This structure is deliberately designed. Hedlak's model was inspired by VISA's original governance structure in 1968 and was formalized through a limited liability company operating agreement that clarified the legal responsibilities of board members.

Organizations do not simply enter the council through purchase. Potential members require majority approval from existing board members and are evaluated based on industry leadership, technical expertise, geographical diversity and fit with Hedlag's mission.

Key structural features

Fixed a ceiling of 39 seats to prevent unlimited membership growth
Each member has a maximum of two terms, each three-year rotating term (Except for Swirlds)
Each member has equal voting rights and is independent of HBAR holdings or company size
Governance through legal limited liability company operating agreements rather than pure on-chain code

How does the one-currency, one-vote governance model work?

In the one-currency-one-vote system, voting rights are directly linked to token ownership. In the structure of most decentralized autonomous organizations, one token equals one vote, ensuring that those with interests in the agreement can directly participate in its management. Networks like Tezos and Cosmos, as well as decentralized autonomous organizations such as MakerDAO, Uniswap and Aave, have adopted variations on this model. As of April 2026, the total market value of governance tokens for these projects is close to US$30 billion.

The appeal is that anyone holding a token can participate, and voting rights reflect financial exposure to the network. But this design has a well-known weakness, the "whale problem."

Whale issues in token voting

In a standard token-weighted voting system, a small number of entities holding large numbers of tokens can determine the outcome, potentially overriding the broader community consensus. Academic research confirms this. A study of Compound, Uniswap and Ethereum name services found that the majority of voting rights are concentrated in the hands of a few addresses, although the same study also noted that these large households rarely override results that override broader community preferences.

The mathematics behind this problem is simple but severe. Imagine three proposals, in which one whale holding 40% of the tokens supports option A, while all other voters split equally between options B and C, and they all prefer B and C to A. In this case, A can win the election even if a majority of voters oppose it.

Low participation exacerbates this problem. Low voter turnout is prevalent in many decentralized autonomous organizations, which means that a small number of active participants can effectively control outcomes that affect the entire community.

Why did Hedlak choose the Council instead of a token vote?

Hedlak's founders built the board model to attract regulated companies that needed predictable and accountable governance rather than governance driven by market speculation. This model distinguishes Hedlag from networks where decisions are influenced by a few token holders or verifiers, reducing risk for companies in regulated industries.

Corporate accountability is at the heart of this proposition. Proponents argue that license verification provides enterprise-level accountability because companies like Boeing or Standard Chartered have corporate reputation closely linked to network reliability, something anonymous verifiers cannot achieve.

The board structure is also designed to prevent network fragmentation. Historically, no single member or minority group has been able to fork the network because the hash map consensus algorithm is proprietary and carries a "non-fork" guarantee, which separates governance from consensus. Since then, the underlying technology has changed: in 2022, the council voted to purchase hashmap intellectual property from Swirlds and open source under the Apache 2.0 license; in September 2024, the code base was transferred to the Linux Foundation to become a vendor-neutral Hiero project. The governance level, i.e. who can approve changes to the agreement, is still done through the board of directors rather than an open token vote.

Trade-off in board approach

reduces permission-free access: Nodes are only run by approved members, which means that ordinary users cannot directly participate in consensus
Enterprise concentration risk: Even though distributed among more than 30 organizations, decision-making power remains within approved corporate entities rather than open to the public
Regulatory clarity: Known legal entities operating under limited liability company agreements make it easier for agencies to assess compliance
Phased decentralization plans: Hedlak's roadmap includes three decentralization stages. The current licensing model represents the first stage. In the future, more node operators will be invited, and ultimately move towards completely license-free participation.

Does the council model affect HBAR's market performance?

Governance structure and token prices are two different issues, but are often discussed together. As of late July 2026, HBAR's trading price range fluctuated within a narrow range. On July 27, 2026, the trading price of Hedrak was US$0.0690, up 5% in 24 hours. The trend is basically the same as Bitcoin, rather than driven by Hedrak's specific factors. The circulating supply is approximately 43.8 billion pieces, the fixed maximum supply is 50 billion pieces, and the market value is approximately US$3 billion to US$3.2 billion.

Price trends have fluctuated greatly this year. HBAR fell from a peak near $0.110 in June to a support area of $0.074 to $0.075, which was in line with the panic low recorded in February, as broader macro pressure from the hawkish stance of Federal Reserve Chairman Kevin Walsh triggered safe-haven selling across altcoins. Recently, HBAR rebounded after hitting the downtrend line and rebounded to around US$0.07, with a market value of nearly US$3.06 billion and a daily trading volume of more than US$43 million.

Along with this price trend, institutional access channels are also expanding. The Canary HBAR ETF (Nasdaq: HBR) was launched on October 28, 2025, allowing investors to directly obtain HBAR spot exposure through regular brokerage accounts, with custody services provided jointly by BitGo and Coinbase Custody. This institutional product is arguably easier to launch on a network with a clear corporate governance and regulatory positioning, which is one of the indirect advantages of the board structure that is not automatically provided by a pure token voting chain.

Conclusion

Hedlak's board model replaces token-weighted voting with a fixed, rotating, vetted group of organizations, with each organization having an equal vote regardless of HBAR holdings or company size. This structure eliminates the "whale dominance" risk that affects one-coin-one-vote networks like those on Ethereum, but also abandons permission-free node participation. The underlying hashgram code is now open source under the Linux Foundation's Hiero project, but the protocol governance itself is still done through the board of directors rather than open token voting. For companies evaluating blockchain infrastructure, this governance choice is a core differentiator rather than a marketing detail that directly shapes how Hedlag positions itself against token-voting competitors in token economics design, regulatory dialogue, and institutional product launches such as ETFs.