Explore Governance
15 Governance tokens listed on Mango
What are governance tokens?
Governance tokens are a category of crypto asset that allows token holders to power the future of a protocol. They provide token holders with the ability to play an active role in determining the future trajectory of the ecosystem.
The principal feature of governance tokens is that they are used in voting mechanisms where the more tokens you have the more voting power you get. This gives holders the power to approve or deny changes, upgrades, and any decisions that have a direct impact on the protocol.
Their design is rooted in fostering key crypto principles such as decentralization, transparency, and community. Governance tokens empower the community, allowing it to collectively decide on the path forward, making them integral to the ethos of collaborative decision-making and decentralization.
Holders of governance tokens inherently possess a deeper commitment to the project's success (as their fortunes are intricately tied to the outcomes of governance decisions). Consequently, governance tokens are a strategic mechanism that aligns the interests of token holders with the enduring prosperity of the protocol. This alignment promotes a collaborative and mutually beneficial ecosystem, where the success of the project is interwoven with the active participation and collective wisdom of its token holders.
History
The inception of governance tokens dates back to 2016, notably marked by the launch of the Decentralized Autonomous Organization (DAO). This pioneering project represented a decentralized venture capital fund that gave token holders the power to cast votes on investment decisions. Unfortunately, the DAO suffered a fatal setback when it fell victim to a hack widely known as the DAO hack. Around $50m of Ethereum was lost and this ultimately led to the project's dissolution. It also resulted in the infamous hard fork of Ethereum.
Despite this imperfect start DAOs and governance tokens have experienced massive growth influenced by early stalwarts like MakerDAO (also on Ethereum). The rise of governance tokens can be attributed to how well they fit with the broader crypto ethos of decentralization and aligning incentives.
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