Governance tokens, tracked live

A governance token is a vote you can sell.

That one line explains most of what's strange about this category. Holders get a say in how a protocol runs (a fee level or a treasury grant, say), and because the vote is a token, it trades on open markets like anything else. Anyone can buy influence, and anyone can sell theirs the moment a proposal goes against them. The bubbles on this page are those tokens, sized and colored by how they're trading right now.

What is a governance token, and what it isn't

A governance token gives its holder voting power in a decentralized protocol, usually one vote per token. Proposals get debated on a forum and then voted on, often with Snapshot, a free off-chain voting tool, before the winning change is carried out on-chain.

What it usually isn't is a share. Most governance tokens pay no dividends and give you no claim on the protocol's assets, let alone a stockholder's legal rights. The difference between a governance token and a utility token is mostly about what the token is used for: a utility token pays for something inside a network, like gas or storage, while a governance token only votes. In practice many tokens do both, and the label often has as much to do with legal positioning as with function.

Some protocols have started sending part of their revenue to token holders through buybacks or staking, and the defi protocols page goes into which ones. Most still haven't. For those, the token's value rests on one thing: what people think the votes will be worth.

What is a DAO in crypto, in practice

A DAO, or decentralized autonomous organization, is the group that holds those votes. In theory it's a company run by code and token holders instead of executives. In practice it's usually a forum, a voting page, a treasury held in a multisig wallet, and a small core team or foundation that writes most of the proposals.

That gap between theory and practice shows up constantly. When Arbitrum launched its DAO in March 2023, its very first proposal asked token holders to approve a budget of 750 million ARB for the Arbitrum Foundation, and it then came out that the foundation had already started moving some of those tokens before the vote. The proposal was split up and resubmitted after the backlash. Nobody stole anything. It just showed who was really in charge.

In November 2021, a DAO called ConstitutionDAO raised about $47 million from thousands of strangers in under a week to buy an original copy of the US Constitution at Sotheby's. It lost the auction to the hedge fund manager Ken Griffin. Its token, PEOPLE, was supposed to be worthless after refunds, and instead it kept trading for years as a meme. Crypto has a way of turning failures into tickers.

DAO voting, and who actually shows up

Turnout is the quiet problem with DAO voting. Most holders never vote, and the ones who do are often a few large wallets. A 2022 Chainalysis study of major DAOs found that less than 1% of holders controlled about 90% of the voting power. One token, one vote sounds democratic until you see who owns the tokens.

Delegation was supposed to fix that: small holders hand their votes to delegates, often university blockchain clubs or research firms, who vote on their behalf. It helps. It also concentrates power in a different set of hands, and delegate turnout varies a lot from one DAO to the next.

Then there are the governance attacks. In July 2024 a group of Compound holders known in the community as the "Golden Boys" (the name stuck, which says something) pushed through a vote to move about $24 million of COMP into a vault they controlled, passing it with thin turnout. A deal was struck afterward, but the vote itself was perfectly valid. Earlier, in October 2022, the trader behind the Mango Markets oracle manipulation attack used tokens from his own winnings to vote on a settlement that let him keep around $47 million. The DAO approved it.

I used to think low turnout was a solvable engagement problem. I now think it's the natural state of any vote where most participants own too little to matter, which is most of them.

Governance tokens on this chart, and what each vote controls

The governance tokens below usually appear as the bigger bubbles. Several also show up on other category pages, because almost every DeFi and layer 2 token is a governance token first. The middle column is what holders decide.

The SKY row is the most interesting one to watch. Its holders have voted to put large parts of the protocol's reserves into US Treasury bills, which makes it a governance token steering a portfolio of tokenized assets. Lido's LDO decides who runs validators for a huge share of staked ETH; if staking itself is new, start with what is proof of stake.

UNI also sits among the dex coins, and ARB and OP among the layer 2 crypto list. This page groups them by what they share, which is a vote and not much else.

Reading governance tokens on the chart

Governance tokens move with the market most of the time, because most of them are also DeFi or layer 2 tokens. They break away on governance news: a vote to turn on fee sharing tends to send a token up, and a contested treasury grab tends to send it down. Not always. When one of these bubbles moves alone, look for a proposal before you look for a market reason. If the whole page is moving with the crypto heat map bubbles on the home page, it isn't about governance.

To see whether a governance token's vote is worth anything to the market, put it beside its peers with a tool to compare cryptocurrency performance over 1Y, and check whether the ones that share fees have held up better. If you're weighing a position, a free crypto profit calculator helps you put numbers on a thesis that is otherwise mostly about future votes.

How it started: The DAO, 2016

The first famous DAO was simply called The DAO. In the spring of 2016 it raised about $150 million worth of ETH from investors who would vote on which projects to fund, one of the largest crowdfunds anywhere at the time. On June 17, 2016, an attacker used a flaw in its code to start draining ETH, about $60 million worth before it was contained.

Ethereum's community chose to rewrite history. In July 2016 a hard fork moved the stolen funds to a contract where investors could recover them. A minority refused and kept the original chain running; it still trades as Ethereum Classic.

Every governance token on this page lives with the questions that fork raised. Code may be law, but people vote on the code, and the people with the most tokens vote loudest. That's not a reason to avoid the category. It's the thing you're buying.