Blockchain technology has introduced a new era of the world we are living in, allowing for greater transparency, accessibility, and control over one's assets. We could discuss the benefits of blockchains and decentralized finance for hours, right? However, while the technology has been praised for its decentralization, the governance of many blockchain projects is still far from optimal, letting room for innovation and improvements.

The current governance system of the huge majority of protocols relies on the "one token equals one vote" model. There exist some variations which, for example, give more power to investors that locked their tokens for a longer period. But overall, this model is flawed because token holders are not necessarily users. Token holders may have a significant stake in the protocol, but they are not necessarily active participants who use the protocol on a daily basis. This can lead to decisions being made that benefit token holder at the expense of users, which ultimately harms the long-term health of the protocol. Arise thus the question of which stakeholder should govern a protocol to create the highest value. The governance token holders? The users? The Core Team?

The answer is not straightforward, and the decision power should probably be shared between different stakeholders: users of the protocol and governance token holders.

An interesting path to explore would be to empower fee payers, or users in general. Users are the ones who drive the adoption and usage of the protocol, which in turn generates revenue for the protocol and benefits token holders. If the governance system is not aligned with users' needs, they may become dissatisfied and choose to switch to a different protocol, which would harm the project's long-term health. An idea would be to give users a predefined share of the votes, which will then be split between them based on their monthly fees. Users may possibly accept higher fees as well since they would be compensated to do so. Let’s take a real-life application of this logic: imagine a world where voters would have voting power proportional to their tax bill. It would probably prevent tax evasion since high taxpayers would be able to decide where they want their money to be spent. (Disclaimer: a governance model solely based on tax bills would not work either)

Back to the topic. What would thus be the purpose of governance tokens? This would imply shifting the focus of governance tokens from voting rights to revenue claims. In this model, governance tokens would entitle the holder to a share of the revenue generated by the protocol, while giving up a share of the decision-making. This would incentivize token holders to focus on the long-term success of the protocol, as they would benefit directly from the protocol's growth. Additionally, it would encourage token holders to consider the needs of the protocol's users, as a successful protocol with happy users is likely to generate more revenue.

Furthermore, a user-centric governance system would help to create a more engaged and active user community. By giving users a greater voice in the protocol's governance, they would feel more invested in the project's success and more likely to contribute to its growth and development. This would create a virtuous cycle in which users and the protocol both benefit from each other's success.

In conclusion, while the decentralized nature of blockchain technology has opened up exciting possibilities for the future of finance, the current governance system is not optimal. The one token equals one vote model often prioritizes the interests of token holders over those of users, which can harm the long-term health of the protocol. By shifting towards a revenue-sharing model and giving more power to real users, we can create a more effective and equitable governance system for blockchain projects.