BlockchainIntermediate#Community#Decision
Governance Token
G
Definition
A cryptocurrency that allows its holders to vote on decisions that govern the development and operation of a blockchain project.
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Concept Diagram
Key Takeaways
1
Governance tokens give holders voting power over protocol development and operations
2
Used in DAOs to manage treasuries worth millions or billions of dollars
3
Token holders vote on risk parameters like which assets qualify as collateral
4
Active participation is key to true Web3 sovereignty beyond just owning assets
Practical Example
Aave token (AAVE) holders vote on which new assets to list as collateral - when they voted to add WBTC as collateral, it unlocked billions in new lending capacity.
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Related Terms
Blockchain
VeTokenomicsA token model where users lock tokens for a period to gain 'Vote Escrowed' power, aligning long-term holders with protocol governance.
Blockchain
DAO (Decentralized Autonomous Organization)An organization represented by rules encoded as a computer program that is transparent and controlled by the organization members.
Blockchain
ERC-20The technical standard used for all smart contracts on the Ethereum blockchain for fungible token implementation.
Strategy
TokenomicsThe study of the economic quality of a cryptocurrency, including supply, distribution, and utility factors.
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