"Governance tokens and their influence on protocol development"

Assalam O Alaikum

Hello dear friends! Welcome to my post. How are you all? I hope you will be doing well by the grace of Almighty Allah. I'm also fine and enjoying my day. Today I'm here to share my knowledge with you about the topic "Governance tokens and their influence on protocol development" in this Steem Alliance community. So let's start without any more delay of time.

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In the realm of digital finance and crypto currencies, the governance tokens plays a vital role by enhancing the decision making processes as it provides us those protocols which has a crucial role in that kind of mechanisms. The governance tokens are also a type of cryptocurrencies which provide the users a power to take a part in the decisions making processes of a blockchain based platforms.

In this regard, we can say that, with the help of the governance tokens, the users can participate in all the process regarding security updates, protocols development and many others within a blockchain network. If we talk about the governance tokens, these are tokens which allow the users to play a special role in decentralized autonomous organizations.

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These are quite different from other cryptocurrencies like Bitcoin, Ethereum and other alt coins. This is because, these digital currencies can only be used to store, trade and transfer from one wallet to another. But in governance tokens, the things are different as these tokens can provide users a whole access to participate in the governance mechanisms and in the development of new protocols within a blockchain network.

Many things are involved in these protocols like changes in privacy policies, update of gas fees and the addition of new features and protocols within a network or platform. A large number of examples are present where the governance tokens are used which allow the people to vote on certain change within the network. They can allow, or deny any upcoming update with the help of their vote in the form governance token.

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The governance tokens has a great influence on protocol development as they have a potential to change the decisions making processes within a centralized network as in that type of networks, the decisions making processes are in the hands of people who are a part of that platform in the form of a community. As in decentralized networks, that process are done with the help of smart contracts and other protocols.

The community of one's platform has a great role in the development of new protocols within the network as they can make that process more democratize with the help of governance tokens which provide them a power of voting to alter the decisions. When a person has a large number of tokens, his influence will be greater as compared to others with a very few number of tokens.

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In this way, the users can play their roles to make that platform more better as, if they think the things are going against their expectations which can be harmful for them and others who are a part of the platform, they cab stop that happening with the help of their influence and power in the form of governance tokens. On the other hand, if a new update is affective for the betterment of platform, they can promote it through voting with the help of governance tokens.

When a large number of people have the governance tokens and they are a part of the platform, they can make it decentralized which make the decision making processes more better. In this way, the whales with more tokens can't control the whole decision making process as a few people with large number of tokens and influence can affect the process.

Conclusion

In conclusion, we can say that, despite enormous benefits, the governance tokens comes with various challenges including, complexity of decisions, protocols and the turnout of voters. But in the digital finance, the governance tokens is a powerful way to introduce new protocols within the network with the help of community through voting. That thing help them to shape their future more effective and powerfully.

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Written by @abdullahw2

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