Holders use governance tokens to propose and vote on changes: fee levels, treasury spending, parameter adjustments, sometimes upgrades to the contracts themselves. Voting power is usually proportional to holdings, which makes governance a function of ownership concentration rather than of participation.
Their value is harder to pin down than that of an asset with cash flows. Some governance tokens direct real revenue to holders or can vote to do so; many confer influence alone. Turnout is frequently low, large holders and delegates decide most outcomes, and a token distributed mainly through incentive programmes tends to end up with holders who have no interest in governing.
Does holding a governance token pay anything?
Only if the protocol directs fees to holders, which many do not. The base entitlement is a vote, and any yield comes from staking or fee-sharing arrangements layered on top.
Last updated October 17, 2026