What are Governance Tokens and how do they operate?

What are Governance Tokens and how do they operate?


Hi fellas hope i find you well, and for those who are new to my Blog welcome. In this article i am going to explain what are governance token and how they are used.

What are Governance Tokens?

These are coins created by the developers of a certain project in order to allow holders of these token to vote and participate in the process of making changes to the project. If you are asked what is Decentralization, this will be your answer, Decentralization is when a coin is not centrally controlled by the developers and they are not the ones to determine the future but instead the rights are given to the community who are holders of these coins.

There are a lot of these coins which include: Maker DAO which is the governance token for the DAI stable coin. it was launched in 2017 and it was being traded around $24 per coin and i has an all time high of $6,339.02 per but currently it is down and is being traded at $3,769.40 per coin. Its supply is limited to 1,005,577 and it currently has market capitalization of $3,750,205,965.

UNISWAP is another Decentralized trading protocol launched in 2018 but started trading well in 2020. The UNI holders are the one who do the voting whenever there is need for any development in the UNISWAP. This token is fully decentralized and its future lies in the hands of the UNI holders.

AAVE is the governance token for Aave trading protocol which runs on the Ethereum Blockchain. The lending and borrowing platform  allows users to take crypto loans. Its supply is fixed at 16,000,000 and the current capitalization is $4,677,931,452. Just 7 months ago it managed to rise from $25.97 to a new all time high of $666.86 but currently its down to $363.95 per coin

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COMPOUND is another governance token which is running on the Ethereum blockchain and through its dashboard holders can participate in the voting process and decision making. Since its a decentralized lending and borrowing platform investors can lend out their cryptos and their interest will be compounded. Its supply is limited to 10,000,000 ans only half of its maximum supply is circulating.

Synthetix is a decentralized finance exchange which issues crypto and non crypto assets. In March 2018 it was trading below $0.4 per coin but it managed to push up and now is trading at $13.50 per coin. Its supply is quite huge, 212,424,133 SNX and its capitalization is only $1,544,667,994 which is still a bit low.

YFN is the governance token for the Yearn Finance which is a an automated yield farming. On their platform there is an option for the for voting for the YFN holders. The YFN is very liquid as it has a capitalization of $1,730,829,057 and it is trading at $47,186.18 per coin and it has assets worth more than $600 million locked up in their vaults. YFN has an all time high of $93,435.53 which is an indicator of how lucrative this governance is.

 

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