Tokenized Governance

Definition ∞ Tokenized governance is a system where ownership of digital tokens grants participants voting rights and influence over a decentralized protocol or project. These tokens represent a stake in the network, allowing holders to propose and vote on changes, upgrades, or resource allocation decisions. It aims to distribute control among a community, fostering decentralization and direct participation in project direction. The weight of each vote is typically proportional to the number of tokens held by a participant.
Context ∞ Tokenized governance is a central aspect of decentralized autonomous organizations (DAOs) and many blockchain protocols, frequently reported in news concerning community decision-making and protocol development. Discussions often address issues of voter apathy, whale dominance, and the design of effective governance models that promote fair and active participation. Future developments seek to enhance governance mechanisms through liquid democracy, quadratic voting, and more accessible participation tools.