The NFX Governance Token

What is a governance token?

In what is known as centralized governance, many conventional corporations are administered by a board of directors or a limited group of people. The average size of the boards of the largest corporations is roughly ten people. They wield significant control over how businesses are run. The board of directors has the authority to appoint and fire senior executives, to decide which projects to fund, and to set the company’s strategy.

Governance tokens are tokens created by developers to empower token holders to help determine the future of a system. Governance token holders can influence project decisions, such as proposing or voting on new feature proposals or even changing the governance system itself.

Governance tokens represent an alternative method of governing organizations. The architecture that governance tokens represent is common for decentralized autonomous organizations (DAOs) and decentralized finance (DeFi), and it provides a more equal, decentralized, and transparent governance system. These tokens are intended to bring communities together in order for blockchain initiatives to thrive.

Proponents of systems that use governance tokens say that they allow for user control, which is consistent with the original cryptocurrency objectives of decentralization and democratization. In most cases, organizations that allow users to control the evolution of their systems are referred to as decentralized autonomous organizations (DAOs).

How NFX is used within the Effect Network

NFX is an integral part of the Effect Network, especially the EffectDAO. NFX is required in order to vote on proposals in the DAO. It is also a determining factor in how many network fees a voting DAO member can receive. The combination of staked EFX, staked NFX, and EffectPOWER determines the vote weight for a DAO member. For more information about this, please see the article titled Stake EFX and NFX.

Where NFX can be obtained

The NFX token information can be found here. It shows a link to where you can buy it, (Defibox.io), its contract information, and even the top 500 holders. Also, thanks to DAO Proposal #105, NFX can be obtained by DAO proposal.