Definition
Governance in the context of crypto and DeFi is the overall framework that determines how decisions are made about a protocol or blockchain network. It covers who has a say, what they can vote on, and how those decisions become changes to the system’s rules or parameters. Governance can be encoded in smart contracts, formal voting systems, or informal community processes that influence the direction of a project.
As a concept, governance defines how power and responsibility are distributed among token holders, developers, and other stakeholders. It includes setting or adjusting protocol settings, approving upgrades, and resolving conflicts about the project’s future. The design of governance strongly shapes how transparent, adaptable, and resilient a DeFi protocol or blockchain ecosystem can be over time.
In Simple Terms
Governance is the way a crypto or DeFi project decides what to do and who gets to help decide. It is like the project’s decision-making system, describing how rules are created, changed, or removed. Instead of relying on a single company or leader, governance often spreads this power across a community of participants.
This concept explains how communities organize themselves around shared rules in a decentralized environment. It focuses on the structures that let people propose ideas, express preferences, and accept or reject changes. By defining these structures, governance shapes how fair, open, and community-driven a blockchain or DeFi protocol can be.