How Does a DAO Govern a DeFi Derivatives Protocol?
A Decentralized Autonomous Organization (DAO) governs a DeFi protocol by allowing token holders to vote on proposals that affect the protocol's parameters, such as fee structures, margin requirements, or the addition of new markets. This mechanism decentralizes decision-making and is intended to align incentives among users and developers.
Governance tokens grant voting power in the DAO.
Glossar
Governance Token
Asset ⎊ A Governance Token grants its holders the right to propose and vote on changes to a decentralized protocol's operational parameters, often including modifications to risk models or fee structures.
Voting Power
Measure ⎊ Voting Power is the quantifiable metric representing the degree of influence a specific participant holds over the outcome of a decentralized governance vote, usually derived from the quantity of staked or delegated tokens they control.
DAO Governance
Decentralization ⎊ DAO Governance, within cryptocurrency, options trading, and financial derivatives, represents a shift from centralized control to distributed consensus mechanisms for protocol management.
Decentralized Autonomous Organization
Governance ⎊ Decentralized Autonomous Organizations represent a novel framework for coordinating collective action, particularly relevant within cryptocurrency ecosystems and increasingly, financial derivatives markets.