Opinion by: Francesco Mosterts, co-founder of Umia.
Crypto prides itself on being a market-driven system. Prices, incentives, and capital flows determine everything from token valuations to lending rates and blockspace demand. Markets are the industry’s primary coordination mechanism. Yet, when it comes to governance, crypto suddenly abandons markets altogether.
Recent governance disputes at major protocols have once again exposed the tensions inside DAO decision-making. Participation remains extremely low and influence is highly concentrated. A study of 50 DAOs found “a discernible pattern of low token holder engagement,” showing that a single large voter could sway 35% of outcomes and that four voters or fewer influence two-thirds of governance decisions.
This is not the decentralized future crypto originally set out to build. The early vision of the industry was to remove concentrated power and replace it with systems that distributed influence more fairly. Instead, DAO governance often leaves most tokenholders passive while a small group determines the protocol’s direction.
Token voting was crypto’s first attempt at decentralized governance. It is a broken incentive system, and it needs to change.
The promise of token governance
The original “DAO” launched in 2016 as a decentralized venture fund where token holders would vote on which projects to finance. The earliest DAOs were inspired by the idea that organizations could run purely through code.
At crypto’s conception, token voting felt intuitive. It borrowed from familiar concepts like shareholder voting, yet DAOs promised a new form of management called “decentralized governance.” Tokens would represent both ownership and decision rights, meaning anyone who held them could participate in shaping the direction of a protocol.
Related: ‘Raider’ investors are looting DAOs
Token voting was supposed to solve problems seen across many industries, including centralized control, opaque decision-making, and misalignment between teams and users. It offered a simple promise: if the community owned the token, the community would run the project. In practice, however, this miraculous solution hasn’t delivered on its promise.
The reality of why token voting fails
Token voting comes with three core problems: participation, whales, and incentives.
Participation is self-explanatory: most token holders don’t vote. With lots of material to review, particularly when many governance decisions need to be made, governance fatigue is a real problem. The result of this, which we now see every day in crypto, is that most token holders are ultimately passive and a small minority decides the outcomes.
When it comes to whales, it is obvious that large holders are dominating. It’s demoralizing for ordinary voters who feel like their opinions don’t matter, even though the original promise of DAOs was that they would have a real voice. What is the point of voting if whales have the final say?
Finally, there’s an incentive problem. Voting has no economic signal. Votes hold the same weight whether you’re informed or not. There’s no cost to being wrong and no incentive for being right. There’s nothing motivating participants to research and vote according to their beliefs.
Realistically, in current governance, voting simply expresses opinions. It does not express conviction.
The missing piece lies in pricing decisions
Crypto is fundamentally market-driven, and it works remarkably well. Markets aggregate information, price risk, and reveal conviction in ways few other systems can. The industry has built markets for practically everything, including tokens, derivatives, blockspace, and lending rates. They sit at the core of how crypto coordinates economic activity. Yet when it comes to governance, the system suddenly abandons markets entirely.
Decision markets introduce pricing into governance. Instead of merely voting on proposals, participants trade outcomes, pricing the possible decisions and backing their views with capital. This transforms governance from a system of expressed preferences into one of measurable conviction.
By tying decisions to economic incentives, participants are encouraged to research proposals and think carefully about outcomes. The result is a governance process that reflects informed expectations rather than passive opinion.
This matters now
Crypto is reaching a turning point in how it coordinates decisions. Governance conflicts, treasury disputes, and stalled proposals have exposed the limits of token voting. Even major protocols struggle to translate tokenholder input into clear, effective action. This has left governance slow, contentious, and dominated by a small group of participants.
At the same time, interest in market-based coordination is resurging across the ecosystem. Prediction markets have demonstrated how effectively markets can aggregate information, while broader discussions around mechanisms like futarchy are returning to the forefront. These systems highlight markets as powerful tools for revealing conviction and aligning incentives.
If crypto believes in markets as coordination engines, the next step is applying that same logic to governance. The next phase of crypto coordination will move beyond simply trading assets and toward pricing and executing decisions themselves.
Token voting was crypto’s first attempt at decentralized governance, and it was an important experiment. It gave tokenholders a voice, but it didn’t solve the deeper incentive problem.
Markets already power nearly every part of the crypto ecosystem. They aggregate information, reveal conviction, and align incentives at scale. Extending that same mechanism to decisions is the natural next step.
Decision markets also extend beyond governance votes into capital allocation itself. If markets can price decisions about a protocol’s direction, they can also price decisions about what to build and fund. This opens the door to a new generation of ventures built directly on crypto rails, where projects can raise capital and allocate resources through transparent, incentive-aligned mechanisms from day one. Instead of relying on passive token voting, markets can actively guide how onchain organizations form and grow.
Governance without pricing is incomplete. If crypto truly believes in markets as coordination engines, the future of onchain organizations cannot be decided by votes alone, but by markets.
Opinion by: Francesco Mosterts, co-founder of Umia.
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