Governance Token

A governance token gives holders the right to vote on how a decentralised protocol is run: fee levels, collateral requirements, treasury spending and contract upgrades. Voting is usually weighted by token balance, typically through a DAO where holders submit proposals and vote on-chain or with signed off-chain messages, and some designs grant more voting power to those who lock tokens for longer. A governance token is not automatically a claim on revenue, and holding one does not guarantee influence: turnout is often low, large holders can decide outcomes alone, and delegation concentrates power further. What the token actually controls, and how supply is distributed, says more about it than the label does.