Governance tokens are cryptocurrencies that grant holders the right to vote on decisions related to a blockchain project, protocol, or decentralized autonomous organization (DAO). They enable community-driven governance, allowing users to propose and vote on changes without relying on a central authority.

A common use case for governance tokens is in DeFi protocols, where users decide on upgrades, fee structures, or treasury allocations. Projects like Uniswap (UNI), Aave (AAVE), and MakerDAO (MKR) use governance tokens to ensure democratic decision-making, enhancing decentralization and transparency within their ecosystems.