What Is a “Governance Token” and How Does It Confer Power?
A governance token is a cryptocurrency that grants its holder the right to vote on the future direction and parameters of a decentralized protocol. The power conferred is typically proportional to the number of tokens held (one token, one vote).
It aligns the incentives of the users with the long-term success of the protocol.
Glossar
Governance Token
Authority ⎊ This specific class of digital asset represents a claim on decision-making power within a decentralized protocol, granting holders the right to propose and vote on changes to system parameters.
Vesting Schedule
Allocation ⎊ The concept of a vesting schedule, particularly within cryptocurrency and decentralized finance (DeFi), fundamentally addresses the phased release of tokens or assets to participants, mitigating risks associated with immediate distribution.
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.