Description

These tokens grant governance rights for Decentralised Exchanges (DEXs) or Automated Market Makers (AMMs). Holders can vote on protocol parameters, fee structures, and treasury spending.

Risks

Speculative Value and the 'Fee Switch'. The value of these tokens is often speculative. Many DEX tokens do not currently distribute protocol revenue to holders due to regulatory concerns regarding securities laws. Consequently, value often relies on the expectation that a 'fee switch' will be activated in the future to share revenue. There is no guarantee this will ever happen, meaning the token may hold no cash flow rights.

Smart Contract Vulnerabilities. DEXs handle massive volumes of assets and are high-value targets for hackers. A bug in the trading logic or the router contracts could allow attackers to drain liquidity pools, destroy confidence in the protocol, and crash the token price.