Exchange Listings Overflow! DeFi Governance Tokens, Who Holds the Voting Power?

DeFi liquidity mining has drained all of our brain capacity in 2020. The complex design makes it easy to overlook the question of "where does the super high interest rate come from." In any case, with two conditions: "high interest rate" and "reasonable fees," then I'll go for it.

Major exchanges have also started to compete in terms of listing speed and variety. These tokens originating from liquidity mining are mostly named "governance tokens," which, as the name implies, are tokens that allow you to participate in governance, a form of voting rights. This enables platform participants to engage in decision-making processes, collectively determining future directions and major initiatives.

However, with an increasing number of governance tokens flowing into centralized exchanges, where should the voting rights reside?

Advertisement - Please scroll down for more content

Where Will DeFi Governance Go?

The Block's research director Larry Cermak posted on the evening of the 21st:

"What will happen when Binance starts representing all its users' tokens in DeFi governance? They have done it with Steem before. Imagine, will they vote for things that directly benefit Binance users. Is this fair?"

Looking back at the Steem incident, the token STEEM can participate in voting on the Steem blockchain. Binance announced on May 23rd this year that it supported the 0.23 version Steem network upgrade, codenamed "New Steem," which was heavily criticized by the crypto community. However, this was seen as Binance bypassing user opinions and attempting to use STEEM for voting.

Some netizens responded to Larry saying that this is why projects like YFI distribute most of their tokens fairly to all participants. Currently, tokens on Binance do not affect governance voting. The key is fair distribution, free listing, and a strong community.

YFI Creator Andre Cronje Says:

Coincidentally, just after Larry spoke, YFI creator Andre Cronje also posted about this issue. He said:

"I believe we will soon see effective capital bribery events in governance. Generally, lenders are for leverage or shorting. They are becoming 'pay to vote' governance custodians. I wonder which protocol will see the first such event."

Dovey Wan, a partner at Primitive Ventures, who is very active in the crypto community, replied below:

"Isn't this part of game theory design? Assuming people are rational economically, then it's not bribery. Just like the vote held by YAM to save themselves, there was a huge change in voting participation when the issue was related to the rewards they could potentially receive."

This discussion is ongoing, what are your thoughts on this?