Glossary
Governance Token
A token that carries voting rights over a protocol's parameters, spending and upgrades.
A governance token gives holders the right to vote on proposals: fee changes, emissions, treasury spending, protocol upgrades. In some protocols voting power depends on the size of the holding rather than one vote per token.
The practical question is what the vote can actually change. If a small group controls enough tokens to pass everything, the token is a way to follow a project rather than a way to influence it.
Delegated and unclaimed votes are the usual failure mode. Large holders rarely vote, which leaves a smaller group deciding, often with incentives that differ from those of the retail holders they represent.
Related terms
Airdrop
Free tokens distributed to wallet addresses, usually to reward early users of a protocol.
AMM
Automated Market Maker — a protocol that prices assets with a formula instead of an order book.
APR vs APY
APR is the yearly rate without compounding; APY includes compounding and is always higher.
ATH
All-Time High — the highest price an asset has ever traded at.
Bear Market
A prolonged decline, conventionally 20% or more from recent highs.
Bull Market
A prolonged rise driven by new demand, easy credit and rising confidence.