# Token-Based Voting ⎊ Area ⎊ Resource 2

---

## What is the Vote of Token-Based Voting?

Token-based voting grants governance rights to participants in proportion to the amount of native tokens they hold or stake within a protocol. This mechanism allows token holders to directly influence key decisions, such as adjusting risk parameters for derivatives or approving smart contract upgrades. The voting process ensures that those with the largest financial stake in the protocol have the most influence over its direction.

## What is the Weight of Token-Based Voting?

The weight of a participant's vote is directly correlated with their token holdings, creating a plutocratic governance structure where capital concentration translates to decision-making power. This design aims to align incentives by ensuring that those who stand to lose the most from poor decisions have the greatest ability to prevent them. However, it also introduces potential risks related to whale manipulation and centralization of control.

## What is the Incentive of Token-Based Voting?

Token-based voting provides an incentive for participants to acquire and hold governance tokens, as this grants them influence over the protocol's future development and financial policies. The value of this influence can be significant, particularly in derivatives protocols where parameter changes directly impact profitability and risk exposure. This system encourages active participation from stakeholders who are invested in the long-term success of the ecosystem.


---

## [Intent-Based Order Routing Systems](https://term.greeks.live/term/intent-based-order-routing-systems/)

## [Proof Based Liquidity](https://term.greeks.live/term/proof-based-liquidity/)

## [Capital Efficiency Based Models](https://term.greeks.live/term/capital-efficiency-based-models/)

## [Trust-Based Systems](https://term.greeks.live/term/trust-based-systems/)

## [Greeks Based Portfolio Margin](https://term.greeks.live/term/greeks-based-portfolio-margin/)

## [Margin Based Systems](https://term.greeks.live/term/margin-based-systems/)

## [Intent-Based Settlement Systems](https://term.greeks.live/term/intent-based-settlement-systems/)

## [Push-Based Oracle Models](https://term.greeks.live/term/push-based-oracle-models/)

## [Sustainable Fee-Based Models](https://term.greeks.live/term/sustainable-fee-based-models/)

## [Order Book-Based Spread Adjustments](https://term.greeks.live/term/order-book-based-spread-adjustments/)

## [Auction-Based Liquidation](https://term.greeks.live/term/auction-based-liquidation/)

## [ZK-proof Based Systems](https://term.greeks.live/term/zk-proof-based-systems/)

## [Auction-Based Fee Discovery](https://term.greeks.live/term/auction-based-fee-discovery/)

---

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---

**Original URL:** https://term.greeks.live/area/token-based-voting/resource/2/