Reading:
What are governance tokens
Understanding CRV and VeTokens
Can Curve’s, veToken Model Be the Future of Defi Token Design?
About Ve(3,3)
![notion image](https://cdn.popsy.co/images/https%3A%2F%2Fwww.notion.so%2Fimage%2Fhttps%253A%252F%252Fs3-us-west-2.amazonaws.com%252Fsecure.notion-static.com%252F5497f976-c1c7-42d8-a7ba-411234fe00c8%252FScreen_Shot_2022-03-15_at_3.57.06_PM.png%3Ftable%3Dblock%26id%3De3f5c2ef-6dfa-4b37-b8b6-428b1d175704%26cache%3Dv2?width=1500&optimizer=image)
In DeFi 1.0, Governance Tokens are used for voting rights - a key element in true decentralization. Governance Tokens were raised by AMM’s like Uniswap and Compound
veTokens (vote-escrowed) are a newer model of Governance Tokens, pioneered by Curve’s CRV and aims to instill value into valueless governance tokens.
Token-holders take on the risk of locking their tokens in exchange for governance power.
Benefits:
- Encourages long-term-oriented decision-making by incentivizing the same and ensuring long-term commitment to the protocol.
- It offers greater incentive alignment across protocol participants. The ve-model has proven to be beneficial since it can align incentives across a wide swath of protocol participants and stakeholders.
- Lastly, it improves supply and demand dynamics by helping numbers go up.