Governance Tokens
A governance token gives holders voting rights over a protocol’s decisions, such as fee changes or treasury spending.
In depth
Proposals are posted on-chain and token holders vote in proportion to what they hold. It is how DAOs and many DeFi protocols make collective decisions without a CEO. Critics note that voting power often concentrates in a few large holders.
Why it matters
Governance rights are a real component of value for many DeFi tokens.