By reading the article “What is Governance Token” published in Adaas Capital, you will get acquainted with the concept of Governance token in general. This level of familiarity can be enough for you to invest in the cryptocurrency market. Join Adaas Investment Magazine to answer the question “What Are Governance Tokens And Their Usages?”
One of the main problems for holders of a token (cryptocurrency) is the management and decisions of the project officials. Fear that project managers will make wrong decisions or make decisions based on their own interests.
In this regard, a basic concept called governance tokens or in the cryptocurrency market was formed that democratically regulates the management of a cryptocurrency or project so that users and holders of that token can participate in the management and decisions of that project.
Governance tokens have become very popular these days. Holders of governance tokens actually benefit from the decision-making power and participation in the survey of DeFi projects, which also contributes to the growth of the Ethereum ecosystem, on which 90% of DeFi projects operate.
However, there are still many users who do not know the importance of these tokens, which certainly becomes better known among users with the growth and popularity of this concept. The governance token has in fact provided a platform for the token’s investors to participate in the management discussions and decisions of the project, where users can participate in the voting process with the project token that governs the development and growth of the platform network.
In fact, the voting system is such that each governance token is equal to one voting right, meaning that the more individual governance tokens there are, the more voting rights there are in the decisions of that project.
In the first few months of 2021, the governance and yield farming tokens have experienced tremendous growth.
In fact, these tokens have made the cryptocurrency community realize the value and importance of DeFI projects. Also, in this release, the Compound token has become the basis of the governance token structure.
The second project to benefit from the glow of governance and build farming tokens was the Balancer (BAL) token. This protocol was designed and built in 2017 and 2018 and was released in 2020 with the Government token.
The remarkable thing about BAL tokens is that they are neither made nor distributed, and in fact, its users receive BAL tokens in return for extraction.
In fact, there are two main reasons for the sudden popularity of governance tokens.
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