What Is the Primary Risk Associated with a High Concentration of Governance Tokens?

The primary risk is centralization, leading to a potential 51 percent attack or hostile takeover of the protocol's direction. A small group could collude to pass proposals that benefit themselves at the expense of the wider community or protocol health.

This could involve changing fee structures, altering treasury allocations, or even manipulating the smart contract logic. Such an event severely undermines the trust and decentralized nature of the project, leading to a loss of user confidence and a sharp decline in the token's value.