A Smarter Framework for Token Incentives

In the evolving world of onchain ownership, one of the most persistent challenges for decentralized organizations is incentive alignment, ensuring that builders, token holders, and core teams are working toward shared outcomes.

At Aragon, we’ve spent years at the infrastructure layer, witnessing first-hand how organizations often becomes bogged down by misaligned motivations, unclear constraints, and disorganized spending.

With the Value Accrual Toolkit, used by projects like Mode and Puffer, we’ve introduced a powerful suite of modularized tokenomic primitives designed to help onchain organizations align incentives at every layer, from governance, to treasury management, to liquidity growth.

In this piece, we’ll highlight two critical features of the toolkit: a gauge-based budgeting framework and Locker infrastructure for liquidity flywheels.

In traditional onchain organization structures, key decisions about treasury allocation and protocol development are often funneled through monolithic, politicized voting processes. With no clear division between strategic and operational decisions, governance becomes a bottleneck instead of a facilitator. Proposals stall. Funding becomes reactive. And token holders – disconnected from meaningful ownership – lack incentives to think long-term.

This results in:

• Contributors chasing funding through inefficient grants or service agreements
• Misuse of shared resources due to lack of budget constraints
• Token holders delegating votes without oversight, often leading to unchecked spending

These patterns hinder protocol growth and weaken community alignment.

One key to solving this lies in restructuring how we allocate capital. Instead of requiring majority consensus to pass proposals, effectively disempowering minority stakeholders, we introduced a gauge system that allows proportional control over shared resources. Own 1% of governance tokens? You can direct 1% of capital.

This linear model enables more dynamic and continuous decision-making and gives every stakeholder a meaningful voice. Paired with structured initiative planning, separating what to fund from who executes, it reduces gridlock and encourages more thoughtful budgeting.

Learn more about how the gauge system works in the full Value Accrual Toolkit breakdown.

A significant portion of decisions for decentralized organizations revolve around resource allocation, yet processes are often heavily politicized, slowing execution, limiting meaningful ecosystem engagement, and stifling growth. Much of the focus is placed on delegation processes and voting coordination, rather than on the outcomes of proposals and initiatives.

Locker-based infrastructure fixes this by connecting governance weight directly to long-term economic commitments. Through veLockers, stakeholders are enabled to lock tokens for increased governance power, allowing incentives to be directed strategically toward liquidity, integrations, and other growth priorities.

By introducing structure to resource allocation, a sustainable flywheel can be bootstrapped:

• Locked token holders allocate incentives toward strategic growth targets.
• Liquidity improves, enhancing user experience and adoption.
• Network effects strengthen, boosting integrations and partnerships.
• Market sentiment improves, lowering the cost of incentivization.
• Protocols spend incentives more efficiently, leading to sustainable revenue outpacing emissions

Once the flywheel is established, protocol revenue can meaningfully outweigh the incentives spent, building a more sustainable and capital-efficient growth model.

Embedding structure into incentive design enables protocols to align stakeholders, concentrate capital toward meaningful outcomes, and prevent value from leaking out of the system.

Dive deeper into how veLockers create sustainable protocol growth in the Toolkit’s official launch post.

What unites both of these components of the Toolkit is a shared philosophy: build infrastructure that enhances agency and alignment.

Whether you’re managing a treasury, designing incentive mechanisms for your protocol, or trying to activate your community, the Value Accrual Toolkit offers a modular foundation to do so intentionally and transparently.

We’re seeing more and more projects leverage this system to move beyond fragmented governance into truly strategic execution. If you’re building onchain and want to unlock smarter, scalable value capture, check out the Value Accrual Toolkit to learn about the full product’s offerings, or reach out to our team.