The crypto money developed for users to take an active role and have a say in important developments and decisions that will shape the future of blockchain technology is called Governance Token or Governance Token. The most important feature of these tokens, as we mentioned in the definition, is that users who own tokens have the right to speak about the product to be developed within the scope of the project's roadmap or about new features to be added to the system. In addition, Governance Token holders can make suggestions for adding new features to these processes and protocols.
This token, which gives its holders both voting and suggestion rights, has a democratic operation in its chain structure.
The Thought of "Every Protocol Is Flawed"
Software in all areas of our lives can serve different tasks, but all these software must be updated over time according to technological and current data, and also the defects must be closed. Early intervention or unforeseen security vulnerabilities can cause troublesome situations. There may be situations where the code structure needs to be refreshed in order to improve. In all these cases, while the decisions of a single centrality are accepted in traditionalist structures, it takes place in a dispersed and democratic structure where everyone has the right to speak.
"Code Is Law"
Governance token holders gain voting rights in future updates, depending on the amount of tokens they own. The votes collected in this way are automatically applied electronically via smart contracts.
These automated systems that allow users to control these changes are called 'Decentralized Autonomous Organization (DAO)'. All transactions made with this method work automatically and systematically through Smart Contracts. Maker (MKR) can be cited as one of the well-functioning examples of the governance tokens we mentioned. As different examples of the governance situation, there are cases where decisions are taken over the chain structure, known as 'Blockchain Governance'. For example, in the Bitcoin chain structure, there were management structures away from their owners, such as increasing the size of the blocks or processing the SegWit idea.
In large structures such as Bitcoin and Ethereum, chains such as "Bitcoin Base" and "Ethereum Base" that are not directly related to BTC or ETH holders have been developed. The QTUM governance token was later released and tried to establish a formal relationship between the administration and the token holders. As a common form of governance, we see that token-based asset management applications come to the fore. In examples such as DASH and Decred, token holders; It provides incentives with premiums by transferring funds to token holders who perform various services related to the functioning of the system, such as R&D studies, social relations, social assistance, and legal representation.
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