There are many occasions where decisions must be taken on how a DeFi protocol operates. These decisions can be on topics such as; which tokens to include, when rewards should be distributed, or how the DAO interacts with other protocols.
In centralised finance, these decisions are taken by the directors, shareholders, or employees of the protocol.
In decentralised finance, it's common for these decisions to be put to a community vote, where anyone who holds the native token of that particular protocol can vote and therefore influence the outcome of the decision.
Tokens which grant the holder access to these votes are known as governance tokens.
After the launch phase of Stake DAO is complete, the protocol will become controlled by community governance, and the Stake Capital Token will grant the holder governance rights.
This will increase the cooperative nature of the Stake DAO, as all token holders will be incentivised to carefully consider decisions and act according to the long-term interests of the DAO.