Vote Escrowed Tokens

Vote Escrowed Tokens are a mechanism in decentralized finance where users lock their native governance tokens into a smart contract for a predetermined period. By locking these tokens, users receive a non-transferable derivative token that represents their voting power and share of protocol revenue.

The longer the lock-up duration, the greater the voting weight and the larger the share of protocol fees the user accrues. This design aligns the long-term incentives of participants with the protocol, as those with the most influence have capital at risk for extended periods.

It effectively mitigates short-term speculation by ensuring that only those committed to the protocol's future can influence its direction. This model is frequently used to distribute governance rights and yield incentives in decentralized exchanges.