@driers

Governance tokens empower holders to participate in decision-making processes, making the project more decentralized. Token holders can vote on protocol upgrades, changes to the network's economic model, or the allocation of funds. This decentralized decision-making contrasts with centralized projects, where a small group or single entity controls the direction. While governance tokens promote transparency and community involvement, they also bring challenges, such as voter apathy or governance by a few large holders (whales), potentially leading to centralization despite the token's purpose. The true decentralization of a project depends on how effectively the governance system is designed and how active the community is in participating.

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