Governance Token

A governance token is a crypto token that grants holders voting power over a protocol or DAO, such as decisions on upgrades, fee parameters, treasury spending, and incentive programs. Governance tokens are common in DeFi because they align users, developers, and liquidity providers around shared control of an on-chain system. In practice, governance tokens can create both decentralization and risk: if voting power is concentrated among a few whales or funds, governance can become de facto centralized. Governance is also vulnerable to low participation and complex proposals that most holders do not evaluate deeply. For mainstream adoption, governance tokens raise questions about regulation, accountability, and whether “token voting” can provide outcomes comparable to corporate governance or cooperative models. Still, governance tokens represent a core web3 innovation: programmable, transparent decision-making tied to a live protocol economy. Long-tail SEO searches like “governance token utility,” “DAO voting,” and “DeFi governance risks” reflect a growing sophistication among users who want to understand not just yield, but the control structures and incentive dynamics that shape Ethereum-based markets. #Ethereum #VEI #VirtualEthereumIndex. Reference: vei.xyz/ethereum-glossary

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