Tokens & Assets
Governance Token
Token granting defined voting or delegation rights
Definition
A governance token grants voting or delegation rights under a protocol’s rules. It does not automatically grant equity, dividends or control over every contract; verify which actions a vote can actually execute.
Example
If 2 million tokens are eligible to vote and you delegate 20,000, you control 1% of eligible voting power in a one-token-one-vote system. Participation and quorum determine whether that matters.
How it works
Voting weight may use a past balance snapshot, delegation or locked-token duration. Approved proposals affect only contracts whose permissions recognize that governance system.
Risks to Consider
- Concentrated delegates can override small holders
- Emissions and unlocks dilute voting influence
- Votes may control a treasury without creating any holder cash-flow right
Common Questions
Is a governance token a utility token?
The categories can overlap. Governance gives specified voting rights; utility means access to a service. Neither guarantees revenue or value accrual.