DeFi Protocol Governance

Definition ∞ DeFi protocol governance refers to the system by which decentralized finance protocols are managed and updated by their community of token holders. Participants typically vote on proposals concerning protocol parameters, upgrades, and resource allocation. This mechanism ensures decentralization and community control over the protocol’s future direction. It is a core tenet of decentralized autonomous organizations within the DeFi space.
Context ∞ The ongoing evolution of DeFi protocol governance involves debates about voter participation rates, the influence of large token holders, and the effectiveness of various voting models. Efforts are underway to improve decentralized decision-making processes and prevent governance attacks. The goal is to balance efficiency with equitable representation for all stakeholders.