Vitalik Buterin Opposes Governance Tokens Speculation



Nov 30, 20222 min read

Vitalik Buterin Opposes Governance Tokens Speculation

Buterin opposes traders' speculation and stockpiling of crypto governance tokens.

Regarding governance tokens, Vitalik Buterin has taken a controversial stance, claiming that governance is not a sufficient justification for such tokens to be regarded as valuable assets.

Buterin stated on Twitter on Tuesday that the idea of "governance rights" as a reason for why a token should be valuable is pathological.

Buterin wrote on Twitter Tuesday. “You're literally saying, ‘I'm buying $X because later on someone might buy it from me and a bunch of other people to twist the protocol toward their special interests.’”

On the Ethereum network, governance tokens are a particular kind of ERC-20 token that are frequently issued by a DAO or decentralized community to be used as digital voting tokens for various community proposals. A person's power to vote increases with the number of tokens they own.

Therefore, Buterin expresses concern about governance tokens being hoarded or sold for profit in order for entities to effectively control protocols because this action goes against  the decentralization principle. He is also opposed to making predictions about a governance token's expected future value.

However, not all tokens are made equal; some have functions beyond voting. For instance, ApeCoin is used for purposes other than governing. Although ApeCoin was first framed as a governance token that would be airdropped to Yuga Labs and its NFT holders to offer voting rights for its new ApeCoin DAO, traders actively speculate on the token's price and trade it similarly to how they would do with Bitcoin or Ethereum.

Then, Yuga Labs NFTs and the upcoming game "Otherside" began accepting ApeCoin as payment, while Gucci previously declared that it will accept the coin in some of its stores.

It's unlikely that there will be a significant change in trader behavior, even as Buterin implores cryptocurrency users to reconsider the perceived value of "governance rights."

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