Definition
A governance token is a blockchain-based crypto asset that encodes formal decision-making rights within a protocol, application, or on-chain organization. Holders of the token are assigned governance powers, typically including the ability to propose or approve changes to parameters, rules, or resource allocations defined in smart contracts. Governance tokens often serve as the primary unit of representation in a protocol’s on-chain or off-chain governance framework.
In Simple Terms
A governance token is a special kind of cryptocurrency that represents decision-making power in a blockchain project or organization. Holding the token gives a participant a say in how rules, settings, or shared resources of that project are decided, according to the governance system built into its smart contracts or related tools.
Context and Usage
The term “governance token” is commonly used in discussions about decentralized protocols, DeFi platforms, and on-chain organizations that distribute decision rights among participants. It appears in protocol documentation, token distribution descriptions, and governance forums where voting power, proposal thresholds, and representation are defined. Governance tokens are central to describing how authority is structured and delegated in decentralized systems.