Despite promises of decentralization, DAOs remain at the mercy of large tokenholders, whose inactivity can be just as dangerous as their involvement. Many decentralized autonomous organizations aren't autonomous, and control is often centralized among large tokenholders who have the power to sway governance decisions.

Whales or small groups of holders controlling as little as $17 million in tokens can attack protocols controlling over $2 billion in user funds. Ironically, inactivity from other whales is also a problem, as their outsized voting power can protect protocols from governance attacks but is often wasted away doing nothing in the background.

The most infamous instance saw a crypto whale known as Humpy propose that Compound DAO allocate $25 million in COMP tokens to a yield-bearing protocol controlled by their group, the Golden Boys. Though the proposal was ultimately canceled, the situation could have been avoided if influential voters had been active.

Source: https://cointelegraph.com/magazine/whales-humpy-gaming-dao-votes-solutions/

The information provided in this article is for informational and educational purposes only, based on news and sources gathered from the internet. This content should not be considered as investment advice, financial guidance, or a suggestion to buy or sell any digital assets. Before making any financial decisions, we recommend consulting with a professional financial advisor and conducting your own research. The author and the blog are not responsible for any losses or damages that may arise from using this content.