Token Governance Model

Definition ∞ A token governance model defines how decisions are made and implemented within a decentralized protocol or ecosystem using its native token. This system typically grants token holders voting rights proportional to their holdings, allowing them to propose and vote on changes to the protocol’s parameters, upgrades, or treasury allocations. It establishes a framework for collective decision-making, aiming to decentralize control and ensure community input. The model’s design influences the project’s long-term direction.
Context ∞ The effectiveness of a token governance model is a recurring theme in discussions about decentralized autonomous organizations (DAOs) and protocol evolution. News often covers significant governance proposals, voting outcomes, and debates around voter participation or centralization of power. Designing equitable and efficient governance models remains a critical challenge for many decentralized projects.