What Are the Mechanisms for Distributing Governance Tokens to Align Community Incentives?

Common mechanisms include liquidity mining, where users are rewarded with tokens for providing capital to the protocol. Another method is a retrospective airdrop, which distributes tokens to early users and contributors, rewarding them for their initial support.

DAOs also use grants and direct rewards for community members who complete specific tasks or contribute to development. These methods aim to place governance power in the hands of active and invested participants, aligning their financial incentives with the long-term health and success of the DAO.