@pillage
Governance tokens are a form of cryptocurrency that allows holders to participate in the decision-making process of decentralized projects. These tokens give users the right to vote on proposals related to protocol upgrades, fee structures, or the allocation of project funds, essentially granting them a say in the project’s future direction. Governance tokens help ensure that decision-making is decentralized and community-driven, rather than controlled by a single entity. They are important because they align the interests of the project's users and developers, incentivizing token holders to act in the project's best interest. However, large token holders can sometimes hold disproportionate power, potentially undermining the decentralized nature of governance.
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