Governance Capture
Governance Capture occurs when a small group of stakeholders or a single entity gains sufficient control over a protocol to dictate decisions that serve their own interests at the expense of the wider community. This can happen through the accumulation of a majority of voting tokens or by manipulating the voting process.
When a protocol is captured, it loses its decentralized nature and becomes vulnerable to extraction of value, censorship, or policy changes that harm users. It is a major risk in decentralized finance, as the governance tokens that are meant to empower users can be weaponized by well-funded actors.
To combat this, many protocols implement safeguards like voting delays, multisig requirements, or specialized governance forums. Recognizing the signs of capture is essential for participants to protect their interests and maintain the health of the ecosystem.
It is a central theme in the study of decentralized governance dynamics.