Governance token

11 Jul 2022

Decentralization has been one of the major features of the crypto space. This is to say that everyone has a voice in the space. To be able to manage this voting, a governance token was introduced.

In some cases, a protocol's native token is locked over a period of time and ve model is issued which is directly proportional to the amount and lock time of the protocol's native token. This ve model serves as the governance token. This doesn't apply in all cases, since some protocols just require token holders to have their token n their decentralized wallet during the period of a snapshot, which will qualify them to vote.

Governance token holders make decisions together in order to affect the general well-being of a protocol, rather than a few bodies deciding the fate of a project, the power is given to the community, which is a good way to promote decentralization.

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