Governance tokens represent proposals for collective decision-making. Each token encodes a specific proposal — such as allocating funds from a community treasury, upgrading a protocol's parameters, awarding development grants, or changing network rules — along with structured voting options and timeframes. Token holders can vote on-chain, with results that are transparent and verifiable. Proposals define a voting period (either by time or block height), a quorum threshold (the minimum participation needed for the vote to be valid), and the available options (commonly yes/no/abstain, but customizable). This mechanism enables decentralized autonomous organizations (DAOs) and community-governed projects to make binding decisions without relying on a central authority.