1 Token 1 Vote

The 1 Token 1 Vote model establishes a direct, linear relationship between a participant's stake in a protocol and their governance influence. Each governance token represents one vote, making the system mathematically simple and transparent.

• Mechanism: A user with 100 tokens has 100 votes; a user with 10,000 tokens has 10,000 votes.
• Transparency: Voting power is publicly verifiable on-chain.
• Foundation: This is the most common model for ERC-20 and similar fungible token-based DAOs.

A primary benefit of 1 Token 1 Vote is its inherent Sybil resistance. Since voting power is tied to a scarce economic resource (the token), it is costly for a single entity to create many fake identities (Sybils) to manipulate outcomes.

• Economic Cost: To double your voting power, you must double your capital at risk.
• Contrast: This differs from 1 Person 1 Vote systems, which are vulnerable to Sybil attacks without robust identity verification.
• Security: Aligns governance power with financial stake, a concept known as skin in the game.

The most significant critique is that 1 Token 1 Vote can lead to a plutocracy, where the wealthiest token holders ("whales") or entities can dominate decision-making.

• Centralization Risk: Large holders or coordinated groups (like venture capital funds) can outvote the decentralized community.
• Example: A proposal beneficial to small holders but unfavorable to a major holder can be easily vetoed.
• Mitigation: Some protocols implement vote delegation or quadratic voting to reduce this power imbalance.

This model is often contrasted with 1 Person 1 Vote, which aims for egalitarian influence regardless of stake size.

• 1 Token 1 Vote: Power ∝ Capital. Used by Compound, Uniswap, and MakerDAO.
• 1 Person 1 Vote: Power ∝ Identity. Requires proof-of-personhood or decentralized identity solutions (e.g., BrightID, Proof of Humanity).
• Trade-off: The former prioritizes capital alignment and Sybil resistance; the latter prioritizes egalitarian representation but faces identity verification challenges.

1 Token 1 Vote is the standard for most token-based Decentralized Autonomous Organizations (DAOs).

• Uniswap: UNI token holders vote on treasury management, fee switches, and grants.
• Compound: COMP holders govern protocol parameters like collateral factors.
• MakerDAO: MKR holders are ultimately responsible for critical risk decisions like collateral onboarding and stability fee adjustments, embodying the "skin in the game" principle.

Vote Escrow (e.g., Curve's veToken model) is a sophisticated evolution of 1 Token 1 Vote designed to encourage long-term alignment.

• Mechanism: Users lock their tokens for a chosen duration to receive veTokens, which grant voting power.
• Enhanced Model: Voting power is proportional to the amount and lock time of tokens, not just the amount. This is often called 1 Token 1 Vote * Time.
• Purpose: Rewards and aligns long-term stakeholders, reducing the influence of short-term mercenary capital.

The purest implementation where each token holder directly casts votes on proposals. This is common in Decentralized Autonomous Organizations (DAOs) for treasury management and protocol upgrades.

• Example: Uniswap uses direct, on-chain voting for its governance, where UNI token holders vote on proposals that execute automatically upon passing.
• Mechanism: Votes are weighted by the number of tokens held, with no delegation. This ensures a direct, transparent link between stake and influence.

A system where token holders can delegate their voting power to representatives, balancing direct democracy with efficiency. This is a core feature of many Delegated Proof-of-Stake (DPoS) and liquid democracy models.

• Example: Compound and Aave allow COMP and AAVE holders to delegate tokens to community-elected delegates who vote on their behalf.
• Purpose: Reduces voter apathy and allows less active participants to contribute their voting weight to knowledgeable delegates.

A more complex model designed to mitigate plutocracy, where the cost of additional votes on a single proposal increases quadratically. It aims to reflect the intensity of preference rather than just wealth.

• Mechanism: A voter with N tokens can cast up to √N votes on a proposal. This reduces the power of large, single-entity token holders.
• Example: Gitcoin Grants uses quadratic funding, a related mechanism, to allocate matching funds based on the square of the sum of square roots of contributions, valuing broad community support over large individual donations.

A system that enhances '1 Token 1 Vote' by weighting votes based on the duration tokens are locked. This aligns long-term stakeholder incentives with protocol health.

• Example: Curve Finance's veCRV model grants boosted voting power to users who lock their CRV tokens for up to 4 years. Similar models are used by Balancer (veBAL) and Frax Finance (veFXS).
• Outcome: Creates a spectrum of influence from 1 token = 1 vote for unlocked tokens to 1 token = >1 vote for long-term lockers, rewarding commitment.

While foundational, the '1 Token 1 Vote' model faces significant critiques that have led to alternative designs.

• Plutocracy Risk: Voting power is directly proportional to capital, potentially centralizing control among whales and funds.
• Voter Apathy: Low participation rates are common, as the cost of being informed often outweighs the perceived benefit for small holders.
• Sybil Attacks: The model is vulnerable to attacks where an entity splits tokens across many addresses to simulate broad support, though sybil resistance measures like proof-of-personhood are emerging countermeasures.

The core criticism of 1T1V is that it creates a plutocratic system where voting power is directly proportional to token ownership. This allows large holders (whales) or coordinated groups to dominate governance decisions, potentially overriding the preferences of the broader, more numerous community of smaller stakeholders. The outcome is governance by capital, not necessarily by merit or the network's best interest.

1T1V often suffers from chronically low voter turnout. For small token holders, the cost of researching proposals (time) and transaction fees (gas) can outweigh their minimal voting influence. This leads to rational voter apathy, where most power defaults to a few active large holders. Low participation undermines the legitimacy of governance outcomes and increases the risk of attack by a motivated minority.

Token holders' financial interests (speculation, short-term trading) may not align with the long-term health of the protocol. Under 1T1V, voters can approve proposals that maximize token price in the short term (e.g., excessive token emissions) at the expense of protocol sustainability (e.g., security, usability). This creates a principal-agent problem between transient capital and long-term stakeholders.

The fungible and transferable nature of governance tokens makes vote buying a tangible threat. Entities can temporarily borrow or accumulate tokens to pass specific proposals, then exit their position. Furthermore, large holders can form governance cartels to consistently vote as a bloc, effectively controlling the treasury and roadmap without needing a technical majority of the total supply.

In delegated 1T1V systems (e.g., Compound, Uniswap), token holders can delegate voting power to representatives. However, delegates often have little personal economic stake tied to their voting decisions. This can lead to low-quality delegation, conflicts of interest, or delegates voting contrary to their constituents' wishes without facing direct financial consequences.

Protocols have proposed alternatives to address 1T1V flaws:

• Quadratic Voting (QV): Voting power increases with the square root of tokens held, reducing whale dominance.
• Conviction Voting: Voting power accrues over time a voter supports a proposal, rewarding long-term commitment.
• Futarchy: Markets are used to decide policy based on predicted outcomes.
• Proof-of-Personhood / Soulbound Tokens: Aim to allocate voting rights per unique participant, not per token.