Opinion by: Francesco Mosterts, co-founder of Umia.
Crypto prides itself on being market-driven: prices, incentives, and capital flows coordinate nearly everything from token valuations to lending rates. Yet when it comes to governance, crypto abandons markets entirely and relies on token voting — a system that has proven broken.
Recent governance disputes at major protocols have again exposed DAOs’ decision-making flaws. Participation is very low and influence is highly concentrated. A study of 50 DAOs found a pattern of minimal tokenholder engagement: a single large voter could sway 35% of outcomes and four or fewer wallets influence two-thirds of decisions. This is far from the decentralized future many envisioned; instead of distributing power, governance often leaves most holders passive while a small group decides the protocol’s direction.
Token voting was crypto’s first governance experiment. It seemed intuitive, borrowing the shareholder model: tokens represented ownership and decision rights, so holders would steer projects. But three core problems undermine token voting: participation, whales, and incentives.
Participation: Most tokenholders don’t vote. Governance requires time and expertise to evaluate proposals; faced with frequent and complex decisions, people get fatigued. The practical result is that a tiny minority of voters determines outcomes.
Whales: Large holders dominate. Their concentrated power demoralizes ordinary holders and defeats the premise that communities can meaningfully govern projects they own.
Incentives: Voting provides no economic signal. Votes carry equal weight whether informed or uninformed; there is no cost for being wrong and no reward for being right. Voting expresses opinion, not conviction.
The missing piece is pricing decisions. Markets aggregate information, price risk, and reveal conviction — they’re the mechanism crypto uses to coordinate most activity. Applying market logic to governance means moving from mere votes to decision markets: participants trade outcomes, backing their views with capital. That changes governance from a measure of opinion into a measure of conviction.
When people must put capital behind a forecast, they’re incentivized to research and form accurate views. Prediction markets and concepts like futarchy show how markets can aggregate information effectively. Pricing proposals aligns incentives, makes commitments costly, and surfaces where real support lies.
This matters now. Governance conflicts, treasury fights, and stalled proposals show token voting’s limits. Even large protocols struggle to turn tokenholder input into decisive action; governance is slow, contentious, and dominated by a few. As interest in market-based coordination resurges, the next phase of crypto coordination should apply market mechanisms to decisions themselves.
Decision markets can also reshape capital allocation. If markets can price choices about a protocol’s direction, they can price what to build and fund. That enables new ventures to raise and allocate capital through transparent, incentive-aligned mechanisms from day one, rather than relying on passive token votes.
Token voting was an important experiment: it gave tokenholders a voice. But it failed to solve the deeper incentive problem. Markets already power nearly every part of crypto by aggregating information and aligning incentives. Extending those mechanisms to governance — pricing decisions, not just assets — is the natural next step. Governance without pricing is incomplete; if crypto truly trusts markets as coordination engines, onchain organizations must move beyond votes and toward markets.
Opinion by: Francesco Mosterts, co-founder of Umia.
