In the crypto world, not all coins are the same.
So what are governance tokens, and which are the most popular in the market right now?
What Is a Governance Token?
Governance tokens can be used to make decisions within a certain ecosystem.
This allows those who hold a certain amount of a given token to vote on decisions within the connection.
Governance tokens originatedin decentralized autonomous organizations (DAOs).
DAOs focus on trustlessness and have no central authority.
That’s a rough outline of how governance tokens work.
Let’s now get into the most popular governance tokens in the market.
The Aave ecosystem is totally decentralized and is run by a community of over 120,000 governance token holders.
AAVE token holders can vote on platform maintenance, implementing new features, adding new assets, and more.
Maker
You may have heard of Maker, or MakerDAO before.
Governance forms a huge part of the MakerDAO platform.
While many associate Dai with MakerDAO, its governance token, Maker (MKR) is also very important.
Decred
Decred (DCR) is a cryptocurrency designed using Bitcoin’s code.
This crypto has its own blockchain and plays an important role in the web connection’s governance model.
Voting with Decred can take place both on- and off-chain.
Decred’s on-chain voting involves the random selection of voting tickets through mining.
Compound
The Compound protocol is another lending and borrowing platform based on the Ethereum blockchain.
It is also a DAO, with a prominent governance system that uses the COMPERC-20 token.
These delegates can then represent token holders in the voting process.
The more tokens a delegate has, the more voting power they have.
In any case, the Compound governance system is a great representation of how decentralized organizations should work.
Uniswap is built on the Ethereum blockchain and allows users to trade within a decentralized ecosystem.
But things don’t stop there.
Uniswap also has a governance process to maintain its platform’s decentralized nature.
Uniswap’s governance model uses the native Uniswap token, known as UNI.
The second phase in the governance process is called the Consensus Check.
This allows a discussion to be had on a potential proposal.
This phase also involves an off-chain vote to see whether the proposal will be put forward.
The third phase, the Governance Proposal, occurs after a proposal has been put forward.
This involves delegates who need at least two million UNI to represent token holders in the voting process.
It’s in this phase that proposals are voted for or against.
This exchange employs a governance model to give holders of CAKE tokens voting power.
CAKE is PancakeSwap’s native cryptocurrency and is used as a governance token within the ecosystem.
Within PancaeSwap’s governance model, individual users can make proposals for changes within the platform.
The PancakeSwap team also posts proposals when relevant.
Users can vote individually in the PancakeSwap governance process without selecting a voting delegate.
7. eCash
eCash is a cryptocurrency that uses the Avalanche proof of stake consensus mechanism.
It is essentially a rebrand of Bitcoin Cash ABC (BCHA), created through a Bitcoinhard fork.
This crypto is designed to be used as a currency for spending on goods and services.
eCash’s governance system uses the platform’s native token, XEC.
Governance is made possible through XEC staking, which data pipe members can use to vote.
Those with XEC holdings can participate in governance via the platform’s Avalanche staking mechanism.
When an XEC holder stakes their funds on eCash, they receive governance rights within the ecosystem.
