What is Governance Token?

Governance Tokens are developed to enable investors to have the right in decisions regarding the future of blockchain protocols and to have the right to comment at the time of decision. In this article, you can find the answer to the question of what Governance Token is.

What is Governance Token?

Governance Token aims to enable investors to have a say in important decisions regarding the future of blockchain protocols. By owning these tokens, users gain the right to decide on the development of the relevant project. While users have the right to comment on the improvements offered, they can also make suggestions for adding new features.

What Do Governance Tokens Do?

Governance Tokens make community able to contribute decision-making process. A democratic project management process is carried out with Governance Tokens. Users have voting rights depending on the number of coins they own.

Advantages of Governance Tokens

Protocols can become out of date over time. In such cases, some innovations may be required. In centralized structures, these developments are realized by executive decisions. Users have a right with Governance Tokens, which have a decentralized structure. Decisions are made on a democratic structure in which all stakeholders participate.

Disadvantages of Governance Tokens

When there is a new development to be voted on within a project, everyone who owns the Governance Token can vote in proportion to the number of coins they own. This can lead to low voting participation of individual users with tokens. The decisions of the team managing the project and the users who have a large amount of that token can be more effective in voting.