Vote-escrow tokens are used to vote on gauges, which determine how the rewards and revenue generated by the protocol are allocated.
With many protocols generating considerable rewards and revenue on a daily basis, there is a real incentive to accumulate vote-escrow tokens in order to vote on gauges to maximize your return. This has resulted in “gauge wars” and “bribes” being used to sway the vote-escrow token holders in a certain direction.
The drivers of the protocols hoped that locking governance tokens for an extended period of time as vote-escrow tokens will help the governance be run by long-term community members and reduce the selling pressure in markets. But many large token holders are dominating the system to maximize their returns even if it is not the best for the long-term growth of the protocol.
Instead of rewards and revenue flowing to the most important and productive parts of the protocol, they are flowing to the most coordinated and well-capitalized token holders, which is not a long-term solution to the incentive problem.
Further reading: https://andrecronje.medium.com/bribing-vecrv-gauges-101-8f6e4506bb62