Vitalik Buterin, the co-founder and chairman of Ethereum, is back with yet another controversial conversation surrounding governance tokens and voting rights. He says these entities are against the concept of decentralization.
Governance tokens are an important aspect to join any DAO or community these days. For anyone to be involved with high-profile personalities or projects, the individual must hold or stake a huge amount of that organization’s digital tokens.
For Buterin, these tokens are “pathological” because they aren’t valuable to the overall market, only the DAO that they represent. That is to say, buying governance tokens is a risk because it only benefits “multimillionaires and hedge funds”; only they can afford to buy massive tokens, so they eventually hold the power to make decisions, even if the majority is against it.
“As a regular individual, “pay $500 to get a 0.0001% chance to influence the outcome of some votes” is just not a good trade,” he added.
Buterin believes this notion goes against the true definition of decentralization where everyone is equal and everything is controlled by the users. As Web3 gets dominated by millionaires and other powerful investors, the idea of ownership is being densified rapidly.
When it comes to forming a DAO, only a few of them can be considered utility-based or authentic but almost every organization is now launching its own governance tokens. This is why Web3 education about these assets is important so that small investors can make informed decisions.
When asked about his prediction on governance tokens, Buterin advised people to reconsider buying them and giving value to them.