Why One-Person-One-Vote Fails in Token-Based Governance

Token-weighted voting is plutocracy. One-person-one-vote is a myth; one-token-one-vote is the reality. This system structurally advantages whales and funds like a16z or Paradigm, whose voting power scales linearly with capital, not user count.

Voter apathy is the default state. Most token holders are rational speculators, not protocol citizens. The cost of informed voting outweighs the marginal gain for a small holder, leading to <10% participation rates common in DAOs like Uniswap or Compound.

Delegation creates new oligarchies. Systems like Compound's Governor Bravo or ENS's delegation shift power to a few 'professional delegates', centralizing influence without solving the underlying participation crisis.

Evidence: In the first Uniswap 'Temperature Check’ for a fee switch, 30M votes were cast, but just 11 addresses controlled over 50% of the voting power.

Equal voting power is catastrophic for token-based systems. It allows a majority with minimal financial stake to extract value from a minority holding the majority of capital. This is a direct attack on the property rights that underpin any financial asset.

Governance is a liability management tool, not a democratic ideal. Protocols like Uniswap and Compound require voters to manage risk parameters for billions in TVL. Granting equal influence to a $10 holder and a $10M holder guarantees mispriced risk.

The Sybil resistance fallacy is the core flaw. Projects spend millions on Proof-of-Humanity or BrightID to create one-person-one-vote, but this solves identity, not incentive alignment. A coordinated group of verified humans with small stakes still has perverse incentives.

Evidence: In MakerDAO's Endgame Plan, the explicit shift to aligning voting weight with locked MKR (EtherDAI) acknowledges this failure. Pure token-weighted voting, while imperfect, at least forces voters to have skin in the game.

Token distribution is wealth distribution. The core flaw is assuming governance tokens represent identity instead of capital. Airdrops and market dynamics concentrate tokens in the hands of whales and VCs, not unique humans. This creates a plutocracy by design, not accident.

Sybil attacks are rational economic behavior. For a large holder, splitting a position into thousands of wallets to influence a Quadratic Voting or airdrop snapshot is a positive ROI action. Tools like Sybil.org and Gitcoin Passport are detection mechanisms, not prevention.

Proof-of-stake logic fails for governance. While Ethereum validators are disincentivized from splitting stake, governance voters face no slashing risk. The economic incentive to consolidate voting power for protocol control, as seen in early Compound and Uniswap proposals, overwhelms any one-person-one-vote ideal.

Evidence: Analysis of major DAOs shows less than 1% of token holders consistently control over 90% of the voting power. The MakerDAO governance attack of 2022 demonstrated how a single entity could acquire enough MKR to pass malicious proposals, validating the failure.

Token-weighted voting is plutocracy. The governance power of a Uniswap or Compound proposal is directly proportional to capital, not expertise or usage. This concentrates control in whales and funds, creating a principal-agent problem where voters lack skin-in-the-game for long-term health.

Vote delegation is not a solution. Systems like Optimism's Citizen House or ENS's delegate model shift power to political entrepreneurs. This creates governance mercenaries who optimize for delegate rewards, not protocol utility, as seen in Curve's gauge wars.

Voter apathy is a feature, not a bug. Low participation rates in Snapshot votes signal rational ignorance. The cost of informed voting outweighs the diluted benefit for small holders, making governance a tragedy of the commons.

Evidence: Less than 10% of circulating tokens vote on major DAO proposals. MakerDAO's Endgame Plan is a direct response to this failure, attempting to fragment power into smaller, focused SubDAOs to escape plutocratic stagnation.