Token governance describes the system by which holders of a digital token can influence the decision-making processes of a decentralized protocol or network. This typically involves mechanisms for proposing changes, voting on proposals, and implementing approved modifications. Token governance aims to distribute control and decision-making power among network participants, aligning incentives and promoting decentralized administration. The weight of a participant’s vote is often proportional to the amount of tokens they hold or stake.
Context
Token governance is a frequent subject in news concerning the evolution and direction of decentralized autonomous organizations (DAOs) and blockchain protocols. Reports often detail significant governance proposals, voting outcomes, or debates about the effectiveness and fairness of existing governance models. Understanding token governance is crucial for assessing a project’s decentralization, its responsiveness to community input, and its long-term strategic trajectory.
A critical vulnerability in Shibarium's Layer 2 bridge allowed attackers to exploit governance token mechanics, enabling unauthorized validator control and asset exfiltration.
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