All terms
A token that grants voting rights over how a protocol is run.
Governance tokens let holders vote on parameters, treasury spending and upgrades. In theory this decentralizes control. In practice turnout is often low and large holders decide most outcomes.
A governance token is not automatically a claim on revenue. Many confer votes and nothing else, which matters a great deal for valuation.
UNI holders govern Uniswap. Whether and how the protocol shares fees with them has been debated for years.
That a governance token gives you a say. It gives you a vote weighted by size, in a system where large holders and the founding team usually hold enough to decide alone. Meaningful influence and a governance token are different things.
Common questions
Does holding a governance token do anything?
Is a governance token a share in the protocol?
Where this comes up on the site
The guides that actually use this word, rather than a list of everything we have written.
Where to go next
More defi terms
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