The Lobby Governance Token Explained

2 min readDec 7, 2021

Why do governance tokens matter?

Smart contracts can be actively changed with governance tokens. Unlike other ecosystems, DeFi does not leave anyone behind or allow them to be voiceless. As a result, developers do not have to make tough decisions, and they can interact with the community and learn what is wrong with the project, why a particular feature needs to be changed, as well as how to handle funding and partnerships.

What is a governance token?

On a blockchain project, governance tokens represent voting power within a DAO. Since they must distribute power and rights to users in order to remain decentralized, they are mostly integrated into DeFi projects. Despite the fact that many DeFi tokens are governance tokens, voting is not the only feature behind them.

The advantages of a governance token

Discussions inevitably lead to collaboration once a vote has been cast, and voting opens the door for discussion. Users are incentivized to collaborate with other members of the community in order to resolve the issue they are facing by directly voting on it. Furthermore, Governance leads to more engaged communities, since users are able to actively steer a project’s direction both on a rational and practical level.

You can learn more about how the Lobby ($LBY) governance token is protecting the frontline of DeFi by checking out our whitepaper.

What is DAO

Decentralized autonomous organizations (DAOs) are being built in new types of decentralized networks. A DAO consists of a group of people who share aligned incentives and common interests. This structure is being used in the development of many new protocols, much of which will be used for open-finance platforms, but also for cultural networks that purchase and trade art and other collectibles.

In the transition to Web 3.0, DAO will play an important role. Eventually, fully decentralized companies will be able to attain the same levels of significance and influence that centralized tech giants currently have in the Web 2.0 era. It will be necessary to adapt a new organizational style to the rise of the value internet, where decentralized apps are managed by community members. DAO will play a significant role in the development of a new type of organization in the Internet era.




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