  With advancements in distributed ledger technologies and smart contracts,
tokenized voting rights gained prominence within Decentralized Finance (DeFi).
Voting rights tokens (aka. governance tokens) are fungible tokens that grant
individual holders the right to vote upon the fate of a project. The motivation
behind these tokens is to achieve decentral control. Because the initial
allocations of these tokens is often un-democratic, the DeFi project Yearn
Finance experimented with a fair launch allocation where no tokens are
pre-mined and all participants have an equal opportunity to receive them.
Regardless, research on voting rights tokens highlights the formation of
oligarchies over time. The hypothesis is that the tokens' tradability is the
cause of concentration. To examine this proposition, this paper uses an
Agent-based Model to simulate and analyze the concentration of voting rights
tokens post fair launch under different trading modalities. It serves to
examine three distinct token allocation scenarios considered as fair. The
results show that regardless of the allocation, concentration persistently
occurs. It confirms the hypothesis that the disease is endogenous: the cause of
concentration is the tokens tradablility. The findings inform theoretical
understandings and practical implications for on-chain governance mediated by
tokens.
