Content corrected by an authorized editor Karol Kiełtyka - 9/23/20, 7:24 PM
Hello. I noticed that more and more projects issue their own governance tokens. What is it? How does it work and why companies do that?
Governance is a token that can influence the management of a project. An example of a governance token is a recently issued YFI.
Governance tokens gives holders the right to control the direction of decentralized financial projects. These tokens are becoming more popular in the cryptocurrency economy as they give users a direct participation in managing DeFi platforms. It can be defined as the fuel that drives the blockchain-based voting process. They are used to support or oppose any changes. Token holders can also vote on new changes to the protocol. A typical governance token system is that each token has one vote. This means that if the token holder has more tokens, he will have more control of the protocol.