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Governance token

In IcelandicStjórnunartóki

A token that gives voting rights over a DeFi service's rules and treasury. It is not a share and gives no ownership stake or right to dividends.

A governance token is a TokenTokenA digital asset created with a smart contract on another cryptocurrency's blockchain, rather than on a blockchain of its own. that gives its holder a vote on the future of a particular DeFiDeFi (decentralised finance)Financial services, such as lending, saving and trading, that run on smart contracts on a blockchain instead of through a bank or other middleman. service. Holders vote on things like changes to the code, interest rates and fees, and how the service's shared treasury is spent. Voting usually takes place on the blockchain, and together the holders form what is known as a DAODAOAn organisation run by rules in smart contracts, where token holders vote on decisions instead of a board or chief executive..

Examples

  • AAVEAave (AAVE)A decentralised lending service on the blockchain where people deposit crypto to earn interest or borrow against collateral. AAVE is its governance token. gives voting rights in Aave, a lending service that runs on Ethereum and other networks. Holders vote on matters such as which cryptocurrencies can be used as collateral and how much can be borrowed against them.
  • UNI launched in September 2020 and gives voting rights in Uniswap, a decentralised exchange. Every address that had used Uniswap could claim 400 UNI for free.

Usually each token counts as one vote, so those with the most tokens have the most say. Holders can also delegate their votes to someone else without giving up their tokens.

What to keep in mind

  • A few often have a lot of say. Founders, investors and other large holders can decide the outcome. A 2022 Chainalysis analysis of the governance tokens of ten major projects found that fewer than 1% of holders controlled 90% of the votes.
  • It is not a share. A governance token gives you no ownership of a company and no legal right to dividends or assets. Some projects have voted to use part of their revenue to buy back and destroy tokens, as Uniswap did in December 2025. But a later vote can reverse such a decision. It is not a right you hold.
  • The price swings like that of any other token, and the voting rights guarantee no value.

Everything in Myntkaup Learn is written and regularly reviewed by the Myntkaup editorial team. It is for education and is not investment advice. Editorial policy. Updated 18 October 2026.