What is a Governance Token?. A governance token grants holders voting power over protocol changes, treasury use, or parameters.
How it works
Votes occur on‑chain or in off‑chain portals with signed messages. Proposals that pass trigger code or multi‑sig actions.
Why it matters
Well‑designed governance aligns users and builders; poorly designed governance can be captured.
Common pitfalls
- Assuming governance equals legal ownership
- Low voter turnout enabling whales to dominate
- Unclear quorums or execution paths
Quick example
Token holders vote to adjust fee parameters and allocate funds for audits.
See also
- DAO
- Treasury
- Tokenomics
TL;DR: What is a Governance Token? defined in plain English with practical next steps.
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