What are governance tokens and how do they work?

Simply put, governance tokens are crypto tokens that interact with the smart contract of a blockchain to grant an owner voting powers for the project. They’re like a little voting chip issued to members involved in the project to accept or reject proposed changes.

What is Terra's governance token?

For example, the Terra network uses a governance token called luna. Luna is traded on digital exchanges, just like a regular cryptocurrency, but one of its core functions is to enable its holders to participate in votes on the network policy.

What are Defi tokens?

They represent the main utility token of DeFi protocols since they distribute powers and rights to users via tokens. With these tokens, one can create and vote on governance proposals. Community members can spend tokens to directly influence the direction and characteristics of a protocol. It is possible to:

What is the largest governance token per market cap?

The largest governance token per market cap is currently COMP, the governance token of the money market protocol Compound. The token offers the opportunity for its group of holders to vote on key improvements to Compound. For voting, COMP may also be assigned to others.