Blockchain Vocabulary - Vote-Escrow Tokens (23/30)

Most original versions of protocol governance models gave all token holders an equal weight in decision-making. Large token holders dominated decision-making and had outsized influence over the market.

As a possible solution, Curve Finance pioneered the concept of vote-escrow tokens. Token holders could lock their tokens in exchange for veTokens and their governance power would increase depending on the duration and size of their locked tokens.  

veToken holders would be incentivized to lock their tokens for the long term with a share of the revenue earned by the protocol and increased influence over the protocol.

The most vested token holders would technically have the most power and rewards, encouraging long-term community participation and growth.  

Further reading: https://curve.readthedocs.io/dao-vecrv.html