Market-based governance uses economic incentives and market mechanisms to guide decision-making within a decentralized protocol. This system often involves token holders voting on proposals, where their voting power is proportional to their token holdings or stake. The value of the governance token is theoretically tied to the protocol’s success, thereby aligning the financial interests of voters with the health of the system. It aims to create a self-sustaining and decentralized decision-making process.
Context
The efficacy and fairness of market-based governance models are subjects of ongoing debate within the decentralized autonomous organization (DAO) community. Concerns exist regarding voter apathy, whale dominance, and potential for collusion. Future developments seek to implement more equitable voting mechanisms and better delegate decision-making to active participants.
The Ownership Coin model structurally eliminates tokenholder-team misalignment by embedding legal and economic rights into a Futarchy-governed, on-chain primitive.
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