Governance Token
A token that carries voting power over a protocol's parameters, treasury and future — shareholder democracy, on-chain.
A governance token grants voting rights in a protocol or DAO: fee switches, treasury spending, upgrades, listings. Proposals pass by token-weighted vote — UNI, AAVE and MKR are canonical examples. Some governance tokens also capture fees; many are votes and nothing more, making their valuation a live debate.
Known failure modes: apathy (single-digit turnout is routine), plutocracy (whales decide), and governance attacks where someone borrows or buys a temporary majority to pass a hostile proposal — protocols now use timelocks and quorums as countermeasures. When evaluating one, read what the votes have actually controlled, not what the marketing implies.