A governance token is a type of cryptocurrency that grants holders the right to participate in decision-making processes regarding the future development and direction of a decentralized protocol or platform. Governance tokens are usually distributed to individuals who provide liquidity or stake their assets in the platform, and they can be used to vote on proposals, make suggestions, or even propose changes to the protocol's code.

Governance tokens are an essential element of decentralized autonomous organizations (DAOs) and are designed to enable a democratic and decentralized decision-making process. By giving token holders a say in the direction of a project, governance tokens can help ensure that a platform stays aligned with the interests of its users and community.