How Do Governance Tokens Fit into the Decentralization Argument?

Governance tokens grant holders the right to vote on the future development and parameters of a protocol, which is a key indicator of decentralization. The existence of meaningful voting rights suggests that control is distributed, potentially negating the "efforts of others" prong of the Howey Test.

However, if the founding team retains a large portion of the governance tokens or if the voting mechanism is illusory, the decentralization argument fails. Effective and active governance participation is crucial.