Governance Token
A token that grants voting rights over protocol decisions, parameters, and treasury allocation.
In-Depth Explanation
Governance tokens let holders vote on proposals affecting the protocol. Voting power may be proportional to holdings or use mechanisms like quadratic voting. Some governance tokens also capture value through fee sharing or buybacks, while others are purely for voting.
Related Terms
Decentralized Autonomous Organization
DAOAn organization governed by smart contracts and token-holder voting rather than traditional corporate structure.
Treasury
Protocol-owned assets held in smart contracts, typically controlled by governance for funding development and operations.
Vote-Escrowed Token
veA token locking mechanism where users lock tokens for a period to receive boosted voting power and rewards.
More in Tokenomics
View all →Emissions
New tokens distributed by a protocol as incentives, typically to liquidity providers or users.
Liquidity Mining
Earning token rewards by providing liquidity to a DeFi protocol.
Token Buyback
When a protocol uses revenue to purchase its own token from the open market, reducing circulating supply.
Dividend
Direct distribution of protocol revenue to tokenholders, typically in ETH, stablecoins, or the protocol's native token.