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Governance Tokens in Demand: Users Want a Vote

Posted by
Ifeanyi Egede

Decentralized finance and now also gaming give users a stake into their success

Governance tokens are becoming common ground in the blockchain space, as both decentralized finance and gaming have started to incorporate them into their economies. These tokens are the direct result of tremendous growth in the crypto industry, technological innovation, adoption, and of course an increased demand for decentralization.

Because of the increasing adoption, there is a demand for more innovative ideas to flow into the space that will benefit both investors and project owners at the same time. Governance tokens are an example of a forward-thinking concept that is gaining traction.

Governance tokens are digital assets that reflect voting power in a blockchain-based project. They’ve recently been primarily integrated into DeFi initiatives since, to stay decentralized, they need to share powers and rights with users. Among the most popular decentralized exchanges are PancakeSwap, Uniswap and SushiSwap. These have their own governance tokens: CAKE, UNI and SUSHI, respectively.

Gamers want governance

Through play-to-earn and incorporating elements from decentralized finance, blockchain gaming is increasingly becoming similar to a financial product. Developers also issue governance tokens to ultimately decentralize ownership over their game world, and give gamers a say in the future of a gaming platform. For example, the virtual world of Decentraland is now governed by a decentralized autonomous organization, or DAO. Users holding the native MANA token in their wallet, have voting power in the decisions of the organization.

A wide variety of gaming projects is building similar concepts. Numerous governance gaming tokens are coming up as blockchain gaming has become the next big thing. Axie Infinity is a name to keep an eye on as their AXS governance token is already live, but doesn’t offer governance utility just yet.

There’s a wide addition of governance tokens available on the market. REVV is used for a variety of racing games, while SAND is native to The Sandbox. SPS is the newest governance token for Splinterlands, ALICE is part of My Neighbor Alice, while My Defi Pet uses DPET.

The trend

DeFi enables blockchain games to create new opportunities for players to earn rewards while having fun. The rise in monetary benefits is something to watch. Most popular in part because of their ability to allow users to buy, sell, and trade unique tokens and assets. Developers can construct their economies and ecosystems using games, and many developers are linking across platforms by doing so.

To be successful, tokens and NFTs will rely on their usage and value for gamers, and this is the same principle driving the use of DeFi in blockchain games to maximize their liquidity.

A greater variety allows players to specialize in games they excel in, and step away those they struggle in. Gamers can keep track of assets that are more valuable to them while also trading assets with other players. 

What to look for

Owning governance tokens can be an investment decision, but it can also be a way to show your appreciation. Uniswap has long been the go-to decentralized exchange for those looking for a quick and easy solution. SushiSwap turned out to be his most significant competitor. In the end, the decision between SushiSwap and Uniswap comes down to your preferences. SUSHI or UNI, or both? These two have some of the most widely distributed tokens in the DeFi space. Basically every decentralized exchange has their own governance tokens, and the better the exchange performs the higher demand will be for these tokens. Being early comes with risks, but can also reap benefits.

Within the gaming world things aren’t much different. Games that attract thousands of players and have a vivid in-game economy, will see their tokens increase in value. As an investor, the development of gaming cryptocurrencies presents a business opportunity to capitalize on building interest into a new product. Splinterlands will launch the SPS tokens this July, The Sandbox has their SAND tokens, while the REVV Motorsport ecosystem uses REVV token for a variety of games.

Closing words

In recent months there has been tremendous growth in the area of governance tokens. These tokens aren’t only an investment opportunity into a potentially growing ecosystem, but also come with utility in a wider ecosystem. In any case, governance tokens will be an interesting development to keep an eye on. These types of tokens aren’t limited to games or DeFi protocols, but can be used across all kinds of on-chain platforms.

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