Plutocracy risk describes the potential for governance systems to become dominated by individuals or entities possessing disproportionately large amounts of wealth or assets. In the context of token-weighted voting, this means those holding the most tokens exert the greatest influence over decisions. This concentration of decision-making power can compromise the democratic ideals of decentralization. It raises concerns about fairness and equitable representation within digital economies.
Context
Plutocracy risk is a persistent and widely discussed concern within decentralized autonomous organizations and proof-of-stake blockchain networks. News frequently addresses debates about how to mitigate this risk, exploring alternative voting mechanisms or quadratic funding models. The challenge of balancing token-based economic incentives with genuinely distributed governance remains a central theme in the evolution of digital asset ecosystems.
This research maps DLT governance vulnerabilities, revealing how design flaws enable centralization and exploitation, crucial for building truly secure decentralized systems.
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