Protocol Capture

Protocol capture happens when a specific group, such as venture capitalists, core developers, or a large institutional holder, gains enough control over a protocol's governance to steer it toward their own private interests. This effectively turns a decentralized project into a centralized one, where the interests of the broader community are sidelined.

Capture can be subtle, occurring through the accumulation of tokens, control over development resources, or the creation of governance structures that favor specific stakeholders. It is a significant risk for any protocol that aims to be truly decentralized, as it can lead to the loss of user trust and the erosion of the protocol's original mission.

Preventing capture requires constant vigilance, diverse participation, and transparent governance processes that make it difficult for any single entity to gain dominant control.