What is Governance Token?

A governance token provides holders with a degree of influence over a platform's protocol, products, and future functionality. Governance tokens are often issued via decentralized protocols that aim to encourage community-led growth and self-sustainability. Holders of governance tokens are typically able to propose changes to the protocol as well as use their tokens to vote on those changes. Governance tokens are used to democratically manage a protocol in a fair and decentralized manner. On Proof-of-Stake (PoS) blockchains, governance tokens may be staked within network validator nodes to secure the platform's security and operational efficiency in exchange for regular staking rewards.