While it is expected of investors to focus on fungible and non-fungible tokens, it seems that new utility-based tokens have reached the market. Market behaviour suggests that with blockchain setting the stage for decentralisation, governance tokens, which give investors the right to vote on blockchain projects, can play a critical role in allowing to do so. Insights from a prediction model by CaptainAltcoin, a digital currency platform, stated that the value of Rari governance token is expected to reach $16.29 in 2030.
Reportedly, six decentralised finance (DeFi) governance tokens such as Aave, Yfi, Uni, Comp, Snx and Mkr, have a combined market capitalisation of $4.1 billion. “Use of governance tokens can help provide holders with ownership in a completely decentralised manner, as these tokens can help to provide exclusive rights in shaping the project’s future. Governance tokens are essential to decentralise the power for users who support the project’s growth and development,” Edul Patel, co-founder and CEO, Mudrex, a global cryptocurrency investing platform, told FE Blockchain.
Experts believe that use of governance tokens can help eliminate the need for centralised system, as a decentralised governance can help investors align with the interests of stakeholders, organisations, the society, among others. According to Bybit Learn, a cryptocurrency trading platform, governance tokens can help with proper implementation of decentralised projects by ensurance of incentives for individuals working towards it. “Governance tokens are crucial as they allow organised distribution of the control of blockchain projects among the community. It enables holders have control over the decision-making process, as they provide the holder with the authority to change the project’s direction and vote on network policies through creation of a decentralised and autonomous system,” Sakina Arsiwala, co-founder, Taki, a cryptocurrency powered social network, said.
Moreover, it is believed that governance tokens can help build decentralised Internet servers through use of Web3.0. Market reports expect governance tokens to help with the development of decentralised autonomous organisations (DAOs) and sectors such as gaming and finance in the future. “Governance tokens give holders the right to vote on proposed changes related to a blockchain network. Holders of governance tokens can also bet, apply for loans and earn money through revenue management. These tokens enable the advantage to get cash flow rights, and has the potential to help with DeFi-based projects,” Sathvik Vishwanath, co-founder and CEO, Unocoin, a cryptocurrency exchange, mentioned.
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