Governance has become one of the hottest topics in DeFi thanks to the issuance of a swathe of different governance tokens. 420 DAO’s token itself is a governance token. So what it is exactly and how it works, this article will walk you through its features.
In the decentralized world of blockchain, projects tend to look for particular ways to distribute a greater amount of power and responsibility to the users. In order to make that work, they need to come up with a method that guarantees only users, or token holders, who show commitment to the project can participate in it.
Decentralized Autonomous Organization, or DAO, is a model that can perfectly handle that issue. Two core features of the name already somewhat suggest its democratized and permissionless organizational structure. Members of the DAO invest their own money in exchange for voting powers and for that reason, anyone would have their say in deciding where or how to invest (not just a sole party possessing the full power).
How do DAO’s members represent their voting powers? It is through a type of utility token known as a governance token.
What do governance tokens do?
Governance tokens are to guarantee the voices of the DAO’s members are heard while making decisions related to, for example, the codebase and its management. Governance token holders also have their voices in deciding which blockchain used to perform transactions or block verifications.
In case there is a new idea about the product, for example, changing or updating a critical feature of the dApp, token holders can vote on a preferable idea through a voting system. It can also be a decision about the DAO’s roadmap, a change in Treasury management or anything else related to the DAO’s daily operations.
Let’s think of it as an upper management team taking decisions related to the company’s future. In this case, the responsibility lies in the hands of the token holders. Users have voting rights depending on the number of tokens they own, for example, 1 token equivalent to 1 vote.
420 DAO tokens
420 DAO structures its decision-making using its own tokens, which are governance tokens. The ticker of the token is $420, which will soon be released so that anyone can purchase and become the 420 DAO’s members.
Similar to any other governance tokens, 420 tokens give holders voting rights over an investment proposal, a change in the app features, etc. After the initial launch, the system will carry out daily auctions in a trustless and autonomous manner following the tokenomics. Existing and new members can acquire and stake tokens on a daily basis and this will help bootstrap the Treasury, making it a deeper capital pool and commensurate with the DAO’s community growing size.
Once the community is ready, 420 DAO will enable governance proposals and voting. Most likely, snapshot.org — a decentralized voting platform will be used to list out proposals coming from the DAO’s members. The members of 420 DAO will propose suggestions and then each token holder can vote on those proposals and enough votes will put the proposal forward and it can be implemented accordingly. The pass rate of each proposal is to be decided later.
One of the outstanding matters that most of the token holders care about is where to invest the Treasury in when it reaches a critical size. At 420 DAO, the Treasury can be used to invest in other lucrative crypto projects, or is deployed in DeFi low-risk yield farms or is allocated to institutional hedge funds (esp. in bear market regimes). The decisions of which particular areas to invest in, say, GameFi, NFT, etc, are to be decided primarily by the token holders through the voting system. The community is expected to get more involved as a result of better governance because users have both a purpose and a mechanism to actively shape the route and direction of the DAO.
While governance token is one of many appealing solutions that crypto offers compared to the closed world of traditional finance, there are still certain issues. For example, many DeFi protocols have their pre-mined tokens, typically held by founders. The governance then turns out to be centralized, which is against what DeFi means. However, this will not happen at 420 DAO, since 420 tokens are issued with a limited number each day and purchased through public-batch auctions.
420 DAO’s members are encouraged to vote where they can also exchange free discussions, which in turn spurs collaboration. This is also one of the intangible membership values that was previously mentioned in another article. Read here for membership values at 420 DAO.
About 420 DAO
420 DAO is a coordinating and supporting body that promotes the development of decentralized economies using its robust tools and 420 DAO token. The project is a revolutionary DAO that has established a dedicated community of crypto proponents, thought leaders, builders, and investors.
The 420 DAO ecosystem is powered by 420 token that has in-build properties such as Store of Value Membership Value Governance value. To learn more about 420 DAO visit,