Governance Token
A token that lets holders vote on changes to a protocol, such as parameters, budgets, and upgrades.
The standard design counts one token as one vote, measured from a snapshot of balances at a specific block so that votes cannot be bought and sold mid-ballot. Proposals usually need a minimum sponsor balance to be submitted, a quorum to be valid, and a timelock delay before execution so users can react. Scope varies widely: some votes execute contract changes automatically, while others are signals that a multisignature wallet may or may not implement. Governance tokens generally convey no legal claim on profits, and directing protocol income to holders raises securities questions in several jurisdictions, which is part of why many protocols leave a fee switch untouched.
In practice
A vote to change a lending market's collateral factor is a parameter change that a governance contract can execute directly after a timelock expires.
The common misunderstanding
A governance token is not a share: it typically conveys voting over code parameters and a treasury, not ownership, dividends, or any enforceable claim on the issuer.