Voting tokens are based on one simple assumption: that the price of the token is strongly correlated to the success of the underlying project, so token holders are incentivized to use their tokens to participate in votes and make decisions beneficial to the project’s future development.

It reduces plutocracy, whale attacks, and voter apathy. Furthermore, it accounts for skin-in-the-game, direct signaling and is relatively permissionless. By using tools like Conviction Voting, holders can increase their voting power. Due to a lack of top-down strategy setting, convergence is a challenge for many DAOs. As a final note, the above sys... See more

Formalizing stakeholders for on-chain governance today typically occurs through simple token ownership and the governance itself through tokenholder voting. Unfortunately, token holdings are not an accurate reflection of stakeholder value in a protocol for a number of reasons