Governance Token
Voting rights in a decentralized protocol
Definition
A governance token is a cryptocurrency that grants holders the right to vote on proposals that affect a blockchain protocol or decentralized organization. Holding governance tokens is the equivalent of owning shares in a decentralized company — the more tokens you hold, the more voting power you have. Governance tokens allow communities to make decisions about protocol upgrades, fee structures, treasury allocations, and partnerships without centralized control.
Example
Uniswap's UNI token is a governance token. Holders can vote on proposals like enabling fee switches, adding new liquidity pool types, or allocating from the $3B+ UNI treasury. A proposal needs to reach a quorum of 40 million UNI votes to pass. Large holders like Andreessen Horowitz and Paradigm have significant voting power.
Related Terms
Frequently Asked Question
What is a governance token?
A governance token gives holders voting rights over a blockchain protocol. More tokens = more voting power. Holders vote on protocol changes, fee structures, and treasury spending without any central authority.
APA Citation
Last updated:
· Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.