Ethereum co-founder Vitalik Buterin shares his perspective on crypto governance rights, saying he finds the notion of governance rights as a narrative for why a token should be valuable is “pathological.”
Buterin tweeted, “You’re literally saying I’m buying $X because later on someone might buy it from me and a bunch of other people to twist the protocol toward their special interests.”
Governance tokens are a type of cryptocurrency that allow token holders to vote on the proposals issued in a community. The primary purpose of governance tokens is to decentralize decision-making and to give holders a say in how the project is run.
Vitalik Buterin is making the case that it shouldn’t be the only use for those tokens. The only people for whom it is a decent trade are multimillionaires, hedge funds, and attackers, and a user obtaining a 0.0001% chance to influence the outcome of certain votes is just not a good trade.
We have seen certain cases where the individual or the group issuing the proposal dumped the maximum votes in their favor with the tokens they hoarded, thus going against the whole purpose of decentralization.
When asked if he has a view on what the best approach should be to governing a decentralized protocol, Buterin replied that existing Ethereum governance works pretty well and is certainly better than a coin vote would have.
When a user expressed doubt on how governance rights differ from ownership, Buterin gave an example noting, “When you own a Starlink, you’re not getting any governance rights over the Starlink network. You’re getting a thing that has direct use value to you personally.”
Some users argued this is the same method of how stocks work, but Vitalik countered by saying that the concept of shareholder voting requires all kinds of regulation like minority shareholder protection to work well.
Also Read: Vitalik Buterin Shares His Views on Safe CEX
