Opinion: Francesco Mosterts, Umia co-founder.
Cryptocurrencies pride themselves on being market-driven systems. Prices, incentives, and capital flows determine everything from token valuations to lending rates and demand for block space. Markets are the main adjustment mechanism for industries. But when it comes to governance, cryptocurrencies suddenly abandon the market completely.
Recent governance disputes in key protocols have once again exposed tensions within DAO decision-making. Participation remains extremely small and influence remains highly concentrated. A study of 50 DAOs found a “recognizable pattern of low token holder engagement,” showing that one large voter can sway 35% of the outcome, and four or fewer voters influence two-thirds of governance decisions.
This is not the decentralized future cryptocurrency that we originally set out to build. The industry’s early vision was to eliminate concentrated power and replace it with a system that distributed influence more equitably. Instead, DAO governance often leaves most token holders passive while a small group determines the direction of the protocol.
Token voting was the first attempt at decentralized governance with cryptocurrencies. This is a broken incentive system and it needs to change.
Token governance promise
The original “DAO” was founded in 2016 as a decentralized venture fund where token holders vote on which projects to fund. Early DAOs were inspired by the idea that organizations could run purely through code.
When the cryptocurrency was conceived, voting tokens felt intuitive. Although DAOs borrow familiar concepts such as shareholder voting, DAOs promise a new form of management called “decentralized governance.” Tokens represent both ownership and decision-making power, meaning anyone holding a token can participate in shaping the direction of the protocol.
The reality of why token voting fails
Token voting involves three main issues: participation, whales, and incentives.
Participation is obvious. Most token holders do not vote. Governance fatigue is a serious problem, especially when many governance decisions need to be made because there are so many things to consider. The result of this, which we are now seeing every day in cryptocurrencies, is that most token holders are ultimately passive and a minority determine the outcome.
When it comes to whales, it’s clear that large owners have the upper hand. This is demoralizing for ordinary voters who feel their opinions don’t matter, even though the DAO’s original promise was to give a real voice. If the whales have the final say, what’s the point of voting?
Finally, there is the issue of incentives. There are no economic signals in the vote. Your vote carries the same weight whether you are informed or not. There’s no price to pay if you’re wrong, and no incentive to be right. There is nothing to motivate participants to research and vote according to their beliefs.
The reality is that in current governance, voting simply expresses an opinion. It is not a statement of conviction.
The missing piece is pricing.
Cryptocurrencies are fundamentally market-driven, and they work very well. Markets aggregate information, price risk, and reveal conviction in a way that few other systems can. The industry has built markets for virtually everything: tokens, derivatives, block space, lending rates, and more. They are at the core of how cryptocurrencies coordinate economic activity. But when it comes to governance, the system suddenly abandons the market completely.
Decision markets introduce pricing into governance. Rather than simply voting on proposals, participants exchange results, set prices on possible decisions, and back their opinions with capital. This transforms governance from a system of stated preferences to a system of measurable beliefs.
By tying decisions to financial incentives, participants are encouraged to explore proposals and think carefully about the consequences. The result is a governance process that reflects informed expectations rather than passive opinions.
this is important now
Cryptocurrency is at a tipping point in how we coordinate decision-making. Governance conflicts, Treasury disputes, and proposal deadlocks have exposed the limits of token voting. Even major protocols struggle to translate token holder input into clear and effective actions. As a result, governance is slow, contentious, and dominated by a small number of participants.
At the same time, there is a resurgence of interest in market-based coordination across the ecosystem. While prediction markets demonstrate how effectively markets can aggregate information, broader discussions around mechanisms like futarky are returning to the forefront. These systems emphasize markets as powerful tools for revealing beliefs and aligning incentives.
If cryptocurrencies believe in markets as the adjustment engine, the next step is to apply the same logic to governance. The next stage of cryptocurrency coordination moves beyond simply trading assets to executing pricing and decisions themselves.
Token voting was the first foray into decentralized governance with cryptocurrencies, and it was an important experiment. While this gave token holders a voice, it did not solve deeper incentive issues.
The market already powers nearly every part of the cryptocurrency ecosystem. They aggregate information, reveal beliefs, and align incentives at scale. Extending the same mechanism to decision-making is a natural next step.
Decision-making markets extend beyond governance votes to capital allocation itself. If the market can price decisions about the direction of a protocol, it can also price decisions about what to build and fund. This opens the door to a new generation of ventures built directly on cryptocurrency rails, allowing projects to raise funds and allocate resources through transparent and incentive-aligned mechanisms from day one. Instead of relying on passive token voting, the market can actively guide how on-chain organizations form and grow.
Governance without pricing is incomplete. If cryptocurrencies truly believe in the market as a regulating engine, then the future of on-chain organizations will be determined by the market, not just votes.
Opinion: Francesco Mosterts, Umia co-founder.
