While people are losing control over their governments in the physical world, governance tokens are getting hot in Web3. Last week, Common, a management platform “for every token” raised $20 million to help communities stay up to date with votes and decision making.
Weren’t we supposed to be in charge of our politicians? After all, they live on our tax money. Yet, few countries have ever held a national referendum, say, on gun control. Can you imagine how many parents in the U.S. would vote for a ban now?
Also, no government has ever let people decide if they want to start a war. Would the majority vote for sending 20-somethings to kill civilians and destroy another country? Most likely, “no” is the answer.
In fact, the idea of a war referendum has been discussed since 1973. Still, governments leave these important matters in their “capable’ hands.
The big question is whether things will be different in the metaverse. The nature of a decentralized world is perfect for democracy and could give more power to the people. Here’s where the governance token comes into place.
A governance token is a type of utility token issued to represent each user’s stake and voting power in decentralized autonomous organizations (DAO).
“If you hold these governance tokens, you can vote on the future of what happens with the product. What happens with the economy, what happens with loyalty, all of these things,” said Stefan Kovach, founder of the Web3 advisory service Rarerthings.
Many Web3 projects recently launched their own governance tokens. For example, GALA, the native cryptocurrency of Gala Games, is also a governance token that may be staked by its holders to contribute to Gala network’s security.
Axie Infinity’s creator, Sky Mavis, also released a governance token earlier this year. The token named RON can be used on the Ronin Network aiming to speed transactions and eliminate expensive gas fees. RON allows users to pay for transactions on Ronin and participate in community governance.
Keeping track of governance discourse is an emerging problem for token holders, says Dillon Chen, founder at Common. The company is creating a cross-network governance platform to tackle this problem and had a $20 million funding round this week.
“With so many proposals, it’s crucial to have one cross-network governance dashboard,” Chen said in a press release. “We work to reduce this pain point for token communities, becoming the one place where they can discuss, vote on, and fund projects together in a seamless way.”
In the coming months, Common’s decentralization plan will take off with the launch of its own governance token, $CMN. The token will allow project participants to control protocol, moderate the platform, and make funding decisions.
The question remains: What happens if one or two whales accumulate a governance token? Will they create a new type of dictatorship or similar flawed systems in which we now live? This is yet to be seen.
