What Is Voting Power?

In the most common model, one token equals one vote: in protocols such as Uniswap or Aave, an address's voting power depends on the amount of governance tokens it holds or that have been delegated to it. To prevent vote manipulation, many systems calculate voting power from a snapshot of balances at the moment the proposal is opened. Token holders can delegate their votes to representatives they trust instead of voting themselves (delegation).

There are also different designs. In the vote-escrow model popularized by Curve, those who lock their tokens for a longer time gain more voting power; this aims to reward long-term participants. In quadratic voting, the cost of votes increases with the square of the number of votes used, which limits the influence of large holders. In Proof of Stake networks, validators' voting power is also usually proportional to the amount they stake.

The main problem with token-based voting is that voting power can concentrate in a few large holders, the founding team, or exchanges. Low participation rates can lead to a small group determining decisions. There have also been governance attacks in the past in which attackers gained large voting power briefly through flash loans and got harmful proposals passed.