How Does a Governance Token Grant Voting Power in a DAO?
A governance token grants voting power based on the number of tokens held by the user. Typically, one token equals one vote, or the weight is proportional to the tokens staked.
This allows token holders to propose and vote on changes to the protocol, including parameters related to the insurance fund, thereby decentralizing the decision-making process.
Glossar
Voting Power
Measure ⎊ Voting Power is the quantifiable metric representing the degree of influence a specific participant holds over the outcome of a decentralized governance vote, usually derived from the quantity of staked or delegated tokens they control.
Governance Token
Asset ⎊ A Governance Token grants its holders the right to propose and vote on changes to a decentralized protocol's operational parameters, often including modifications to risk models or fee structures.
Voting
Governance ⎊ Voting within cryptocurrency, options trading, and financial derivatives represents a mechanism for stakeholders to exert influence over protocol parameters, listing decisions, or the direction of decentralized autonomous organizations (DAOs).
Power
Influence ⎊ Within cryptocurrency, options trading, and financial derivatives, influence transcends mere market movement; it represents the capacity to shape expectations and, consequently, asset valuations.