How Does Token Holder Governance Affect the Security Token’s Cash Flow?
Token holder governance in a security token context allows holders to vote on key economic decisions, such as the distribution of profits (dividends), fee structure changes, or treasury management. This ability to influence cash flow distribution can increase the token's perceived value.
However, it also introduces governance risk, where a majority of holders could vote to divert cash flows in a way that is detrimental to minority holders, which must be accounted for in the risk assessment.
Glossar
Cash Flow
Valuation ⎊ Cash flow, within cryptocurrency, options, and derivatives, represents the net amount of liquidity generated and expended over a defined period, critically influencing asset pricing and risk assessment.
Security Token Context
Valuation ⎊ Security token context necessitates a departure from traditional asset pricing models, integrating both equity-like and debt-like characteristics within a unified framework.
Security Token
Token ⎊ A security token represents ownership or rights to an underlying asset, leveraging blockchain technology to facilitate fractionalization, enhanced liquidity, and programmable compliance.
Token Holder Governance
Framework ⎊ Token Holder Governance, within the convergence of cryptocurrency, options trading, and financial derivatives, represents a decentralized decision-making paradigm where token ownership grants participants voting rights and influence over project parameters, protocol modifications, and resource allocation.