> For the complete documentation index, see [llms.txt](https://docs.flash.trade/flash-trade/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.flash.trade/flash-trade/flash-trade-protocol/faf-token/faftarchy-governance.md).

# FAFtarchy Governance

Futarchy is a governance system where decisions are made through prediction markets instead of traditional voting. Think of it as "betting on beliefs" - the market decides what's best for the protocol

Flash Trade is governed by **FAFtarchy** — a futarchy system where markets, not ballots, decide proposals. Instead of counting votes, each proposal opens conditional markets and the market's judgment determines the outcome.

### How a decision gets made

{% stepper %}
{% step %}
**A proposal is drafted**

Ideas incubate with the community in Flash Labs, then are formalized against the proposal standards.
{% endstep %}

{% step %}
**Two conditional markets open**

A **PASS** market and a **FAIL** market trade side by side — participants back the outcome they believe helps Flash Trade. See Voting on Proposals.
{% endstep %}

{% step %}
**The market decides**

The Time-Weighted Average Price (TWAP) of the two markets determines the outcome — the side the market values more wins.
{% endstep %}

{% step %}
**Execution is automatic**

Approved proposals execute on-chain. Trades on the losing side are refunded.
{% endstep %}
{% endstepper %}

{% hint style="info" %}
**Why markets instead of votes?** Voting rewards popularity; markets reward being right. Participants put value behind their beliefs, so decisions aggregate information rather than sentiment.
{% endhint %}

### Where it happens

* **Discussion and drafting:** Flash Labs
* **Proposal rules:** FAFtarchy Commandments
* **Trading on proposals:** Voting on Proposals — live proposals are hosted on [MetaDAO](https://metadao.fi)


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