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Governance Token

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Table of contents
    1. 0.2. How Governance Tokens Work
    2. 0.4. Importance of Governance Tokens

A Governance Token is a type of cryptocurrency that grants holders voting rights within a blockchain or decentralized application (dApp). These tokens empower users to participate in protocol decisions, such as upgrades, fee structures, and other governance matters.

How Governance Tokens Work

Holders of governance tokens can propose changes or vote on proposals put forth by others. The weight of their vote is often proportional to the number of tokens they hold. This system allows for decentralized decision-making, ensuring that the community has a say in the direction of the project.

Importance of Governance Tokens

Governance tokens promote decentralization, aligning the interests of users with the long-term success of the network. They also provide an incentive for token holders to stay involved and engaged with the platform, as their decisions directly impact the project’s future.