Non-Token Governance

Ink Finance
4 min readJun 16, 2023

In the realm of Web3, Decentralized Autonomous Organizations (DAOs), a fresh governance approach, actively empower individuals and teams, granting them increased autonomy in coordination and organization. Yet, achieving this objective demands more than ambition; it requires a shared sense of purpose, meticulous collaboration procedures, a resilient decision-making framework, and transparent governance systems. The challenge lies in navigating intricate power dynamics and reconciling diverse interests while pursuing shared objectives.

Ink Finance has unveiled its Non-Token Governance on Testnet amid these evolving dynamics. This novel system offers the project modifiable governance mechanisms tailored to its different stages. From Non-Token/Badge Governance to Token Governance and a hybrid model merging tokens and badges, these options aim to sustain the project’s momentum and cultivate an environment that promotes innovation.

How does the Non-Token Governance work

The number of available voting methods often restricts most on-chain governance contracts. Traditional governance models, driven solely by economic or financial power, need to be revised and be more robust, with a tendency to veer towards monopolistic control, thereby undermining the essence of fair governance. To address these concerns, Ink Finance has introduced an innovative solution — the Non-Token Governance, also known as the Badge mechanism, to cater to the diverse interests of its community members.

The Non-Token Governance enables projects to tailor specific badge parameters to their needs. These parameters can encompass many considerations, from creating or importing badges to defining and naming badges and even determining voting rights. It extends to include the number of available voting options, the method of vote calculation, and the integration and specification of time locks.

This governance model ushers in an era of fair representation by empowering DAOs to allocate a pre-defined number of badges to members based on their contributions. The system awards members specific rights, voting power, governance authority, and rewards, ensuring a seamless alignment.

Advantages of Non-Token Governance

  1. Flexibility and Innovation: This model thrives on its capacity to adapt to various governance needs and developmental stages. It fosters a culture of innovative thinking and encourages experimental decision-making, thereby propelling the project’s progress and evolution.
  2. Fairness: Unlike traditional governance models that rely on token holdings, Non-Token Governance anchors itself on participants’ reputations, contributions, and expertise. This approach actively promotes a more equitable and democratic governance process, sidestepping the pitfalls of wealth concentration and excessive influence from a few token holders on the decision-making process.
  3. Decentralization: The model is firmly rooted in community participation and collaboration, offering every member a fair chance to voice their opinions and contribute to decision-making. This decentralized approach curbs power centralization and manipulation risks, bolstering community autonomy and transparency.
  4. Long-Term Orientation: Unlike token based governance models, which can be swayed by short-term price fluctuations, Non-Token Governance prioritizes long-term interests and sustainable development. Its decision-making process focuses on the project’s long-term vision, development strategies, and the broader interests of the community, particularly when the utilities of a generic token have not been well defined.
  5. Anti-noise: Non-Token Governance reduces dependence on token prices and market fluctuations, thereby reducing noises in governance decisions. This model can better isolate community activities and the uncertainty of the crypto market, in order to fully release the real value of the communities.

Within the dynamic ecosystem of cryptocurrencies, it’s often more efficient and flexible to leverage the community economy with NFTs or merit scores, using these values to propel the ecosystem’s growth. Since it is inherently difficult for “utility tokens” to capture the infinite possibilities of value generation, the complexity can make them unsuitable as governance tools.

To summarize, the Non-Token Governance model anchors off of a governance mechanism that emphasizes fairness, decentralization, and long-term orientation. By adopting this model, the community can focus on autonomy with participation. This model provides distinct advantages for a project’s sustainable development, encouraging value generation from and for the community, rather than short-term speculation of token price fluctuations. The Non-Token Governance provides a critical alternative to token-based governance schema, a resilient, inclusive, and democratic approach to the governance in the rapidly evolving world of Web3.

About Ink Finance

Ink Finance is an on-demand financial management SaaS, enabling on-chain organizations to build effective operation structure and perform best-practice financial management. Motto: Finance is built on credit, and credit comes from competence.

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Ink Finance

Ink Finance is the DeFi engine for Protocols, DAOs, and RWA Originators. Build On-Chain Competence & Financial Credit | https://www.inkfinance.xyz/