Governance Token
A token that grants voting power over a protocol's decisions, from fee settings to treasury spending and upgrades.
A governance token turns holders into voters. Hold UNI and you can vote on changes to Uniswap; hold AAVE and you weigh in on the lending protocol's parameters. One token usually equals one vote, and proposals pass or fail on token-weighted tallies. This is the machinery behind most DAOs.
The model carries real tensions. Token-weighted voting means whales decide outcomes, and turnout is often low, so a small, motivated group can steer a protocol. Many governance tokens also trade as speculative assets with thin links to actual cash flows. The vote is real; whether it is worth much depends on what the protocol actually controls.
Related terms
An organization governed by token holders voting on-chain, where rules and treasury live in smart contracts instead of a boardroom.
Utility TokenA token that grants access to a product or service rather than ownership, used to pay for usage inside a network.
TokenA digital asset issued on top of an existing blockchain, usually through a smart contract rather than its own network.
DeFi (Decentralized Finance)Financial services run by code on public blockchains, letting people trade or borrow without a bank.