# The Governance Token - $\*\*\*\*\*

## Tiered Governance

### Pros and cons of governance tokens <a href="#pros-and-cons-of-governance-tokens" id="pros-and-cons-of-governance-tokens"></a>

The following script is quoted from Binance Academy (Read original article [here](https://academy.binance.com/en/articles/what-are-governance-tokens))

*"Governance tokens have some great benefits. They can eliminate the misalignment of interests often seen in centralized governance. Decentralized governance enabled by governance tokens transfers that management power to a broad community of stakeholders, aligning the interests of users and the organization itself.*

*Another advantage of governance tokens is the ability to build active, collaborative, and close communities. Every token holder is incentivized to vote and improve the project. Because one token mostly equals one vote, it can lay the groundwork for fair and more equitable decision-making. Every token holder can initiate a proposal to be voted on. The details of each vote are open for everyone to see, which lowers the chance of cheating.*

*The biggest challenge of government tokens is the so-called whales problem. Whales are people who hold a large percentage of a certain crypto. If the biggest whales of a crypto project hold a significant portion of the overall supply of its governance token, they could swing the voting process to their favor. Projects need to make sure token ownership is truly decentralized and evenly distributed.*

*But even if governance tokens are distributed fairly and broadly, there is no guarantee that the majority decisions are always the best for the projects. One-person, one-vote election systems have a long history and their track record is mixed. There have been cases when governance token holders vote to benefit the founding teams and large investors at the expense of the wider community."*

### Limited proposal rights and universal voting rights

To strike the sweet balance of decentralized voting rights and stakeholders' proposal rights, we will be limiting proposal rights to the top 10% of $\*\*\*\*\* holders and release the voting rights to all $\*\*\*\*\* holders. &#x20;


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