Boosting Economical Security of DeFi protocols

Increasing token utility reduces liquid supply, making tokens harder to acquire and governance attacks more difficult. For instance, in the COMP case, the reduced availability of tokens raises the threshold for creating proposals and achieving quorum, thereby enhancing governance security.

Furthermore, protocols can empower stakeholders — such as stakers or holders utilizing tokens in other markets that boost value — to participate in governance. This reduces the influence of liquid token buyers who swoop in at the last moment to manipulate votes.