Tokenweighted

Tokenweighted is a mechanism in which governance power, access rights, or economic rewards are allocated in proportion to a token's holdings or stake. In governance contexts, tokenweighted voting grants voters votes proportional to the number of tokens they hold or have staked at a reference time, rather than granting equal votes to all participants.

Implementation typically relies on on-chain or snapshot-based calculations. A snapshot block or timestamp is used to fix token balances, ensuring that transient transfers don't immediately alter outcomes. Some systems use continuous or time-weighted staking for dynamic influence. Variants include delegation, where token holders appoint representatives, and quadratic voting, which modifies the relationship between stake and influence to counterbalance large holders.

Applications include decentralized autonomous organizations, protocol governance, and reward or access control mechanisms. Tokenweighted schemes can align influence with economic stake, incentivize long-term participation, and scale to large participant pools.

Criticisms center on centralization risk from large holders, volatility of token prices, and governance capture. Other concerns include concentration of power, susceptibility to sybil issues if token issuance is easy, and the potential misalignment during token distribution changes. To mitigate, some designs employ cap limits, time-locked staking, minimum balances, or quadratic voting.

See also: governance token, staking, DAO, token economics, quadratic voting, on-chain governance.